Coles notes version:
Poker rooms make money by raping the players, er, raking every hand. Small amount, varies slightly per room, but the zillions of hands mean gazillions of $'s for the poker room.

Poker rooms want an endless supply of players, to continue to keep getting the gold. So much so that they will take some of the rake money off of the pile to pay affiliates to recruit players.

Some affiliates realized they could recruit more players paying a percentage to a player, as an incentive to sign up with them. This can be officially sanctioned, or under the table, in some cases (cough, Party, cough).

So, you sign up for rakeback with an affiliate. You play many hands of poker, paying rake for every hand you enter. Every month or two weeks, you receive a percentage of your rake back.

You = happy.
Affiliate = happy.
Poker room = VERY happy.
Bad poker player = happy (doesn't know any better)

Hope this helps.