To transform data from a flattened format into a more organized structure with multiple rows for each item, a utility called `jq` can be used to manipulate the JSON output. The transformation involves using the `to_entries`, `map`, and other functions within `jq` to reorganize the data. This approach allows for easier summarization, querying, sorting, selecting, and displaying of the data in New Relic. The process enables developers to collect and analyze telemetry data from various sources, including the Pi-hole DNS platform, and transform it into actionable insights that drive thoughtful action within their organization.