As far as I know its the muscle on top of the horses back, and bum. Horses who lack topline will have a '^' shape on their backs. The highest point been the back bone. Whilst those with more topline will be more rounded. I will try and add some pics from the internet in a moment.
ETA: Vision is a good example of no topline
Here you can see her bum (un-level, she was resting a leg) http://i214.photobucket.com/albums/cc252/_ginny_/DSCF8863.jpg
Can you see how the back bone does not run smoothly into her bum, it sticks up a bit.