A trackback is the automated process of notifying a blog or site that you linked directly to one of their posts.
Some blogging platforms automatically create a trackback when you link out to a post . Others require using the trackback field to ping their blog.
Once a trackback is created, the blogger will need to verify the link (like a comment) before it will show up on their blog. Once your trackback is approved, your link will display in their comments section.
If the blog has a high enough google rank, this can help your SEO and also bring traffic your way.
This is also a great way for you to link out to other bloggers, and give their readers a way to find relevant posts on your blog!
Credit: Hip Vine
Check out this quick tutorial on Trackbacks which gives more useful information.
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