In ironmongery terms, the backset is the measurement from the edge of a door to the centre of the door furniture spindle or keyhole (or both - they are normally the same). The backset measurement can get confused sometimes with the overall width measurement of the lock or latch that you may be looking for, so we have provided a diagram below which should make things clearer.
Backset size mainly becomes an issue when you are fitting door knobs, as you will need to ensure the knobs are far enough away from the door frame, thus avoiding clashing hands/knuckles on the frame when opening a door into a room.
So the main thing to consider when selecting a latch or lock, is how much room do you have overall? (width) - most doors have some sort of moulding or detail, which restricts the amount of room you would have to position a handle or knob set.