Both Gershon Dubin an
Michael Benstock correctly explain the letters as
meaning: <<Teheh Nefesh Tzrurah Bitzror Hachaim--may his/her soul be bound
up in eternal life.>>
They also both gave excellent account of customs.
The only thing I want to contribute is that this phrase goes back to
Biblical phrase--it is the famous statement that Avigayil said to David to
prevent him from killing Naval unnecessarily (who died anyway of natural
causes). See Sam 1:25:29. The point of the story is that because David (we)
believe in eternal life we therefore don't regard as so important the
insults of this world and this encourages us to abstain from sin.
In general many customs have Biblical roots and a study of stories leads
a greater appreciation of the customs.
Hope this helps appreciate this (beautiful) Sefardic Minhag
Russell Jay Hendel; RHendel @ Mcs Drexel Edu