lloyd from RTSR explains it very nicely:

It is very simple. The source (root) copies his cd(s) and is mailing them to 2 or more branches, 
those branches copie 2 or more cds and mail them to other branches or to (a) leave(s). Leaves are 
people that have no burner or just the end of the mailing chain because there are not more people 
to mail to. After setting up the whole list of who is mailing who, this looks like a tree :)

A couple tiny details:

A tree is supposed to do 2 things:
1) Spead out a recording to a large number of people very efficiently
2) Get trading going on between people

When you get the show from the person above you, the two of you can work out a trade for it. 
Your branch may just give it to you for free, but the de facto standard is to trade for it. 
This could be anything from swapping shows, to blanks, to children, etc. Talk to the person 
above you in the tree and see what you two agree on!