This is used to hide or "push in" the background texture to put in line with the border or edge textures of the frame.
Example:
<Backdrop bgFile="Interface\DialogFrame\UI-DialogBox-Background" edgeFile="Interface\DialogFrame\UI-DialogBox-Border" tile="true"> <BackgroundInsets> <AbsInset left="11" right="12" top="12" bottom="11"/> </BackgroundInsets> </Backdrop>
You add the background file which is the dialog box background. You then add the edgeFile which will be the dialog box border texture (this will go around the border or "edge" of the frame). You will notice if you remove the background insets you will see the background texture on the outside of the edge texture. BackgroundInsets fixes this.