Another good reference:
osvaldo gave you a pretty complete explanation--what makes it hard is that the "backreference" is embedded in other code.
First, look at the simple syntax for a backreference. This code finds the first occurrence of "yp" and replaces it with "y":
sed 's/\(y\)p/\1/' filename
In a backreference, everything in the escaped parentheses is inserted where the "\1" occurs. Obviously, this could be done with:
sed 's/yp/y/' filename
The best way to learn sed is to write very simple commands first--once you know how they work, then add more layers of complexity.