The concept of a callback is simple: you create a function, "package" it in some way, and pass it as an argument to another function, to be executed wholesale at a later time. Here's what the process looks like in Erlang:
My personal favorite usage of callbacks in Erlang is to protect functions which should only be available to authenticated users. It's also handy for building GUIs with e.g. wxWidgets (and Erlang's wx module). I'd be interested to hear what other uses people have found for function callbacks; suffice it to say, though, that I'm hooked on them.