A "backend" in Terraform determines how state is loaded and how an operation
apply is executed. This abstraction enables non-local file state
storage, remote execution, etc.
By default, Terraform uses the "local" backend, which is the normal behavior of Terraform you're used to. This is the backend that was being invoked throughout the introduction.
Here are some of the benefits of backends:
Working in a team: Backends can store their state remotely and protect that state with locks to prevent corruption. Some backends such as Terraform Enterprise even automatically store a history of all state revisions.
Keeping sensitive information off disk: State is retrieved from backends on demand and only stored in memory. If you're using a backend such as Amazon S3, the only location the state ever is persisted is in S3.
Remote operations: For larger infrastructures or certain changes,
terraform applycan take a long, long time. Some backends support remote operations which enable the operation to execute remotely. You can then turn off your computer and your operation will still complete. Paired with remote state storage and locking above, this also helps in team environments.
Backends are completely optional. You can successfully use Terraform without ever having to learn or use backends. However, they do solve pain points that afflict teams at a certain scale. If you're an individual, you can likely get away with never using backends.
Even if you only intend to use the "local" backend, it may be useful to learn about backends since you can also change the behavior of the local backend.