Taken directly from the `bash` man page:
caller ... displays the line number and source filename of the current subroutine call.
In simple terms, it tells you where you just came from. Think of it like the fairy take where two kids are exploring the woods and leaving breadcrumbs along the path they take. The `caller` builtin points them at the last breadcrumb they dropped so they can get back to it. (ok, the kids are after all kinda stupid). Repeated use of this builtin cal help lead you all the way back to the command you actually ran, that ended up N levels deep in function calls.
It's basically a recording of the answers to "what function was I in before I got to this one?" at every level of function call.