Trackback is a feature which works in two different modes.
Client mode
The client mode is, that you send a Trackback ping to another blog to what you make a reference in your blog entry. For that feature you must enter the trackback url of the remote blog you are referencing in your blog in the Trackback url textbox of your blog entry.
Server mode
The server mode is working in backgorund. If somebody writes a blog entry which refers to a blog entry in your blog, and he use the trackback link of your blog entry the trackback ping of the other user pings your trackback url in the background. If you have enabled anonymous comments in your blog settings the trackback ping of the remote site creates a trackback comment in your blog entry.
For more information of trackback you can see the information on wikipedia
Regards
HP