I keep hearing people talk about how they upgraded to a ball bearing turbo. What does that mean exactly? If most turbos don't have ball bearings in them, then how do they work.  

there are two types of turbos out there, a ball bearing turbo and a journal bearing turbo. The ball bearing turbo is obvious, it has races on both the shaft and the housing and the shaft rolls on the balls.

A journal bearing is like the bearings in your engine. It is two polished hardened steel surfaces that have oil forced between them to keep them from actually touching.

the ball bearing turbo is far more efficent because of the lower amount of drag. The BB turbo will spool up faster and last longer also.