Loopback recording is the ability to record streaming audio playing through the interface in real time.

As an example: here's Youtube playback through the MT48 via DAW1 channel, out of Mix 4 [Headphone 2]:

In Menu > Settings > USB IO, enable the Bus Return Mix options for the appropriate output pair.  Note the USB Channel Input Pair number, which is what will be routed into the DAW on a track’s input:

In your recording software, insert a track and set the track’s input channel to the above USB Channel input pair (9-10, in this case.) 

DO NOT ENGAGE INPUT MONITORING on the track – this will cause a feedback loop with the direct monitoring already occurring with the MT48.

Any effects enabled on the DAW 1 channel (with the appropriate mix selected) will also be recorded in, including Bus Effects.