When a player's connection to the server is having difficulties, especially if a mapserve is imminent or if server ticks are being lost, they may find themselves snapping back to where they were some period of time ago, up to several seconds. The effect is like being snapped back by a rubber band, hence the name.
The reason this can happen is that to some extent movement on the map is determined locally by the user's machine and doesn't require information from the server. A player can tell that a rubberband event is imminent if they can move around, but not activate any powers or take any actions other than movement. This is because the server is momentarily not responding, and those other actions require interaction with the server. The connection has not been totally lost, however, as actions taken by other characters can often still be seen.
To the victim, the game simply snaps back to an earlier position. To other players, the stricken character may appear to flicker from location to location.