It's all that information you know about your characters and the story that led up to the start of your book.
It's every emotion and motivation driving the characters into this plot.
It's all those interesting little tid-bits of history between characters / demons on their backs that make them real.
But it can also be a millstone around the neck of your novel.
See, backstory is important for you and the reader. But the reader doesn't care about the backstory until they care about your characters. If you try to give them too much early on, they get bored. If you don't give them enough, they get frustrated.
So how do you know when to include backstory? And how do you weave it in so it isn't an information that leaves your reader yawning and taking that trip to the bathroom?
Well, first of all, you don't start your book with backstory. I know sometimes it feels like the reader needs to know how the characters came to be here, but if that were true, your book should start on the day you're having them hark back to. Extensive backstory isn't needed until the reader is firmly ensconced in your story. Period. Throwing in the odd fact is fine. Giving paragraphs, or worse, pages, to backstory at the beginning is death for a novel.
Tip #1: You could try writing your first draft without any backstory at all. Assume the reader knows everything. Then have another writer read it and let you know where the story needs fleshing out (the results may surprise you).
Tip #2: Pick up any traditionally published (read: professionally edited) novel and you'll notice that in most the only backstory in the first ten-twenty pages will be a couple sentences or a short paragraph. And it will only be used as framework for the story which has already started (Note: That means the story is moving forward, not waiting patiently while the backstory is explained). In other words, the backstory included at this piont isn't enough history to tell it's own story, it's simply a reference point for the reader so they understand what's happening now.
Tip #3: Don't include backstory until the moment in your novel to which it applies. That means no trying to "prepare" the reader. No assuming the reader wants to know how your character came to have that emotional scar (until the moment the emotional scar hooks a plot-point). And when you do explain, give the barest facts. Again, this is where critiquers will be a great asset. They can tell you whether you've got the balance right.
Tip #4: In your own mind, consider backstory to be the salt on the popcorn, not the box of Maltesers you have on the side. In other words, you shouldn't taste it by itself. It should be sprinkled over the top to enhance the flavor of the main course. So, by all means, drop in the occasional fact, memory or emotional point. Let it flow as part of the story happening now. But don't interrupt the plot to inform the reader. Internal narrative is highly useful for this, but be careful not to let backstory overcome the protagonist's focus on the present.
Tip #5: Trust your readers. They've read lots of novels before. They know they won't know everything - and most of them like it that way. If you make the plot present and active, they'll happily wait to be informed of how this all came to be. And in the best circumstances, your backstory becomes a "reveal". You've hooked the reader. They're curious, intrigued, even burning to know. You wait for the perfect moment in the story - the absolutely last moment. Then you lay the information at their feet with a flourish and they say "Oh! So that's why..."
No matter what, however you choose to address the backstory question, just remember: Backstory is history. It can't be changed. There's little or no tension in it, because it's already happened and is out of the character's control. The current plot, however, is still up for grabs. The reader is waiting to see whether the character will win, or not.
Let nothing get in the way of that. Because that's why your reader is reading.
Your Turn: Do you struggle to know how / when to include backstory? Do you have any tips or questions?