I could have a blog named "friends". And it would have a trackback url, which is like a secret url. Meaning, humans don't click it, other blog systems do.
And I could give that "friends" trackback url to all of my friends that have blogs.
So, if they wanted, whenever they blogged to their own blogs, (if they were running a blogsystem that knew about trackback), they could also choose for their system to hit/activate/ping my "friends" trackback url at the same time.
The end result? Well, I'd have a "friends" blog that would automatically blog an update whenever my friends updated their own blogs. It would excerpt their post. I mean, normally I do that anyway, manually, when I notice a friend says something interesting. But this way it's automatic.
Now, what's really the extension of this is that I could do this on a per-post basis. Have a trackback url for each post, and let people refer to it when they blog something of their own that refers to it. It's clearer now that that is described as an extension.