A back-story is a literary device often employed in order to lend a story depth or verisimilitude. Characters or events related to a story may only be given cursory treatment so as not to distract from the central plot development.
Probably the most extensive back-story ever created was that created by J. R. R. Tolkien for his Middle-earth stories. Other fantasy authors, notably Robert Jordan in his Wheel of Time series, have followed suit. However, they probably have competition with J. K. Rowling's backstory for the Harry Potter books.
In science fiction, Frank Herbert's Dune series has an extensive back story, which has allowed other authors to write a series of prequels based on it.
When George Lucas wrote the original Star Wars movies, he wrote a back-story to explain where everybody came from. That backstory is now being made into the prequel trilogy.
Likewise, the third Indiana Jones movie Indiana Jones and the Last Crusade begins with a scene set in Indy's childhood, explaining where he acquired his hat, his whip and his fear of snakes; this in turn led to the television series, The Young Indiana Jones Chronicles, which can be seen as a backstory to the movie trilogy.
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