Whenever we meet someone new, we don't instantly know everything about that person. We form an opinion of the person based on the immediate information we receive upon meeting him or her--what they do for a living, what kind of sense of humor they have, what they like or dislike, whether they have a short temper or not. We might decide, "Wow, he really was snotty to that nice police officer who stopped him for a broken tail light." Or, "Gosh, she didn't have to be so rude to that cashier." That paints our perception of that person and we decide we might not really like them as much as we originally thought.
But what if the man who was snotty to the cop was raised by a police officer father who put on a good face to the public but was abusive to him and his siblings behind closed doors? What if the woman who was rude to the cashier did so because the cashier happened to have the same name as her husband's mother-in-law with whom she's never gotten along or her manner reminded her of the person who snagged a golden job opportunity right out from under her? Now we have some understanding and some sympathy for the person.
In the first Black Horse Campground mystery, "End of the Road", there is a great deal of back story that is hinted at. Most of it has to do with J. D.'s mysterious appearance and some of it is resolved by the end of the book but there is more that has yet to be explained (stay tuned for Book 4!) But the reader has gained some understanding of J. D. and that makes him a much richer character. In "No Vacancy", the third book in the series, readers learn more about Corrie's back story--the mystery involves events that had to do with Corrie's parents and took place long before the mystery in the story takes place.
It is possible for the author to tell all the back story in what is commonly called an "info dump", but to do so runs the risk of boring the reader to death. Boring a reader is a capital sin and should be avoided at all costs. Think about meeting a new person and having them plop down right next to you and immediately tell you every detail about their lives which may, or may not, have anything to do with any future interactions you may have with them (note--if they bore you enough, that's almost a guarantee that future interactions with this person will NEVER happen!) And so it is with stories.
The key is to include only the back story that actually adds to the main story and clarifies a character's actions and motivations. Used this way, back story helps to build a stronger story and helps to enrich the characters.