While this cue is often repeated, few people actually do it. That's too bad, because the cue is applicable to almost every movement pattern in the gym, especially for pulling.
For any horizontal pulling (like seated cable rows) or vertical pulling (like chin-ups and pulldowns), keeping the shoulders back and down will ensure your lats and mid back are being worked, as opposed to the upper traps and biceps.
In the video here, the first couple of reps are performed incorrectly and the last couple of reps are performed with the shoulders back and down.
See the difference?
And here's how it looks with the pulldown:
While it isn't necessary to start every pull with your shoulders back and down, you want to finish each rep in this position.