  PSR J1023+0038 (J1023) is a binary system hosting a neutron star and a low
mass companion. J1023 is the best studied transitional pulsar, alternating a
faint eclipsing millisecond radio pulsar state to a brighter X-ray active
state. At variance with other Low Mass X-ray binaries, this active state
reaches luminosities of only ~$10^{34}$ erg s$^{-1}$, showing strong, fast
variability. In the active state, J1023 displays: i) a high state
($L_X\sim7\times10^{33}$ erg s$^{-1}$, 0.3-80 keV) occurring ~80% of the time
and during which X-ray pulsations at the neutron star spin period are detected
(pulsed fraction ~8%); ii) a low state ($L_X~10^{33}$ erg s$^{-1}$) during
which pulsations are not detected (~<3%); and iii) a flaring state during which
sporadic flares occur in excess of ~$10^{34}$ erg s$^{-1}$, with no pulsation
too. The transition between the high and the low states is very rapid, on a ~10
s timescale. Here we put forward a plausible physical interpretation of the
high and low states based on the (fast) transition among the propeller state
and the radio pulsar state. We modelled the XMM-Newton spectra of the high, low
and radio pulsar states, finding a good agreement with this physical picture.
