Simply put: "Used" water is pulled back into the main water supply. Technically: Water that has left the main water supply, then entered into your home or business to intermingle with numerous contaminents is no longer safe for drinking. Once this water is pulled back into the pipes in the wrong direction, it has the opportunity to mix with the clean drinking water, thus contaminating the entire town's water supply.
When there is a sudden drop in water pressure in your area (usually during the elimination of a fire, or concurrent use of large amounts of water by too many people at one time) the drop in pressure is what then pulls water that has already been expelled back into the main water supply.
Out of sight, all water pipes entering your home, the restaurant down the street, and your local hospital, are all connected to the same water supply. In your residence or business, any mechanically-controlled use of water (ie: lawn irrigation, fire sprinkler system, pop machines, pedicure bowls, etc.) a backflow preventer is a necessary accessory to your plumbing system. A "backflow preventer" is just what it sounds like. Once water pressure drops, the backflow preventer seals shut, not allowing any water to flow backwards in the wrong direction. The EPA mandates that all backflow preventers be tested and certified once, sometimes twice per year, depending on the geographical location of the backflow preventer. If a water customer chooses not to meet this requirement, that customer will eventually be faced with the termination of their water service until they are able to show proof that their device has been properly tested and maintained. This annual or semi-annual testing is what ensures the safety of your drinking water.
Thanks to Chicago Backflow Inc. for the above information.