Can anyone explain how this usort actually works

The term "weight" is often used to describe similar values in sorting algorithms, so I'll use it here as well ...

-1 means that $a has a lower weight than $b
0 means that $a and $b are equal
1 means that $a has a higher weight than $b

Higher weight values are moved in front of the lower weight values in the list, and because you'd eventually have all list items compared to each other, you end up with a sorted list.