Out-of-band signaling is a method of transmitting telephone control signals on a separate channel from the content (or "traffic") signals.
Early signaling systems carried the control signals on the same circuit as the user traffic; for example, the older in-band analog systems use this approach. The newer signaling systems, such as SS7, use a separate channel for signaling information. These systems are called common channel signaling (CCS) systems because a separate (common) channel is used for signaling. Some people call this approach out-of-band signaling and it is preferred to in-band signaling because it is more efficient and robust.
Two types of Out of Band Signaling exist today; Physical Out-Of-Band and Physical In-Band/Logical Out-Of-Band Signaling. SS7 is an example of the first type -- physical out-of-band signaling-- in which a separate physical channel is used for signaling. ISDN is an example of physical in-band/logical out-of-band signaling. With this later approach, signaling and user traffic share the same physical channel, but part of the channel is reserved only for signaling traffic; The remainder is reserved for user traffic, such as the telephone call. In ISDN, packets are multiplexed in time in order to subdivide the available bandwidth between logical channels.