Here’s the ”home” for Trackback.  However, that may not help you much, so here’s an example that will probably help more than just reading that info:

Let’s say that both you and I run websites that have the capability to Trackback.  I’m browsing around the web one day and come across an interesting article on your site.  I decide that I want to make an entry in my weblog that references your article.  I create my entry—which happens to link to your article—enter the “Trackback URL” and submit my entry on my site.

When I submit my entry in ExpressionEngine, it sends out a “ping” to your site.  This ping basically says “Hey, I just made an entry that’s related to this other article on your site.  Here’s an excerpt from my entry, my site name, and my URL.” So, now I have an entry on my site.

Your server receives the ping and then posts a Trackback associated with the entry I pinged.  Typically, Trackbacks are listed similar to comments and are used as a way of knowing who’s talking about your posts.