rounser: Yes, but “backstory that the players might not discover” does not imply “doesn’t make sense at all”.
Look at Tolkien: Why was Tolkien’s work so powerful? At least in part, because of the enormous backstory he implied. Everything has a history in Middle Earth. He might not reveal what that history is in the course of The Lord of the Rings, but it’s there. He drops a lot of names. He sometimes goes into detail about the history of one thing or another. But, it’s not like the reader has the ability to cause that backstory to be revealed more fully.
And this doesn’t detract from the story, it adds to it. There’s a sense of history, and all is well in the world.
Other authors of speculative fiction do the same thing, in different ways. Some total hacks completely fail to do it (and that’s one of the reasons so much genre SF&F is so forgettable.) Backstory is the history of the world, and a good author will use the backstory to tie the current events together, and use current events to reveal the skeleton of the backstory, without ever having to do something as gauche as just coming out and telling the reader what happened.
So, it’s the same way with game backstory. You absolutely need to provide enough backstory to the DM for the DM to be able to see how everything ties together. If you do not, the DM has no way of knowing which things are important, or understanding their interrelationships. The best kind of backstory for an RPG is motivation: it is much much more important to be able to understand the motivations of a character, because that allows you (as the DM) to predict what the character would do in situations that the players thrust that character into. From the players’ side, that motivation may or may not be significant. It’s important that the NPCs actions are predictable, not random. It’s not necessary to know exactly what the reasons are, so long as you can predict.
For example: The players might find out that the magical defenses for a given keep are weaker on a given day of the week. This gives them great predictive power. Further checking might show that the same person is always in charge on that day of the week, so the players now know enough to predict that if that person is taken out of the rotation, it will cease to be any easier to enter the keep on that day. The players have no need to know that the reason this person’s magical defenses are weaker on that day of the week is that he’s secretly magically communicating with his lover on that night. But the DM should know this, because knowing about that relationship might be necessary to project the character’s motivations... If the PCs kill the lover, he’s going to be more than a bit upset, for example. If they walk in on him, they might overhear something. But in 9/10 cases, the players will never know anything but “Thursday night is the night to attack, they’re always weaker on Thursdays.”
In short: backstory provides the potential for verisimilitude: the appearance of truth. If you try to create verisimilitude through completely random means (say, wandering monster tables), people will quite easily detect that the events are random. (Humans are amazingly good at detecting patterns.) If you throw in a model of what creatures live in what biomes, then things start to get better. If you add intentionality to the mix (there are more bandits here than there... why do more people act as bandits in this place than this other place? Why more this year than last year?) you really need to have more idea why, because intentionality suggests things that may be investigated and changed by the PCs.
To provide a convincing appearance of reality to sentient beings, you’ve got to have at least a minimal idea of the answer to the question “why?”