RSS basics, permalinks, and trackbacks have been handled elsewhere in these forums and probably in the WP FAQ as well, so this thread may get closed by the admins.
As far as web use of RSS feeds, that may or may not have been covered. Here's a really super basic introduction:
When you post to your blog, that content goes into a database hosted on WP. That database then feeds the content back out to your site pages in a format readable by a standard web browser. (http://yzed.wordpress.com/) Hence, people can surf the web and find and read your posts. That database also feeds the same content out in XML format (http://yzed.wordpress.com/feed) for RSS readers to receive as syndicated content. Currently, the majority of people read RSS feeds through online readers like My Google or My Yahoo.
Someone with a website who likes your content and thinks that it will help their site can build a page to access your RSS feed and display it on their site. (Your feed is syndicated unless you opted to make it private.) Such pages include links back to the content source of the feed (in this case your site) as well as links to each of the individual post pages from that feed. These will show up on your site as Trackbacks, and you'll know about them.
Generally, this kind of syndication is a sign of a really great blog, and many bloggers actively work toward making their content useable in just this way. It's a huge and still growing trend as web developers are on a constant lookout for great dynamic content (free doesn't hurt either) to enhance their own sites. Blogs, especially high content, audience targeted ones, are the perfect answer.