It pretty much is the distance from the center mounting flange of the rim to the back edge of the rim. This determines how far in or out the rim is from the body. Generally the more backspacing you have the closer to the frame the rim will sit. Too much backspacing may cause interference with the upper A arm and frame at turn. If you have too little, the tires will end up rubbing on the flares and what not at turn. Hope that makes a little sense.
I had it installed by a 4x4 shop near my work because I didn't have the time to do it myself. I had some major probles with the shop that installed it, as in they didn't put it on correctly. I have since redone it myself and it has been perfect, no problem for the last six months. Some of the problems that I had included bolts no staying tight, incorrect washers used, and steering shaft not tightened. If you have a shop do the work, make sure they are a good shop, my mistake. To tighten up the bolts I used a split washer on the body bolts. The directions call for you to press off a washer from the original body mout bolt, the shop didn't and used some crappy flat washers, needless to say I successfully blew out both of the rear cab mounts, their falt not the body lift kit.
Now that that rant is over, I have had no problems with it and it is a very good kit, when installed properly. If I did it again I would probably only do a 2 inch body lift to releave some of the stresses on the cab mounts. Performance Accessories helped my clear up any concerns I had and made everything right.