The object is to “further the discussion.” If a visitor to your blog reads a post and notes a permalink (explained below) to another post on a related or same subject they can also read that post.
The simple version:
You have a post on baking bread, for example (Blog A), another blog (B) also has a post on the same subject. On blog B there will be (or should be) a “TrackBack URL” listed.
Copy that URL and place it in the “Send trackbacks” box below the text section of your edit/write post page. The trackback will be sent when you publish the post.
A word about etiquette: As a general rule the person sending the trackback should place somewhere within their post a mention and link (The permalink on their post) of the blog the TB was sent to.
Something like, “John of Blog B also has a good article on baking whole wheat bread.”
That can take any form you like, whatever fits your style of writing and the post it’s contained in. As I said that is the general rule and many bloggers if they receive a TB and note there is not permalink of his blog in your post they may deleate the TB.