A power supply (or transformer) is a device that changes the incoming electricity voltage level to a different voltage level. Channel letter signs require a power supply because the standard incoming current typically does not meet the letter illumination requirements.
Power Supplies come in two standard configurations - "step up" and "step down". Step up transformers increase the voltage output, and step down transformers decrease it. Neon illuminated channel letters typically need a step up transformer, and LED letters usually use a step downtransformer.
For example, here is one Power Supply that is used by Direct Sign Wholesale:
LED CHANNEL LETTER POWER SUPPLY
This step down transformer is one of the standard LED units used at Direct Sign Wholesale. It has a DC output of 12 volts, and complies with the UL 48 standard.