I've just replaced my rear muffler after the last one rotted out.
I've just put a redback on as well. I ran the car without rear muffler for a couple of days while I was waiting for the new one. Interesting thing was the car had a heap more poke and sounded like a race car without the rear (its an AE82 twin cam).
The muffler I chose was the same size (16 in) and less restrictive. Less restrictive means less inner baffles (2 rather than 3).
The muffler does what it says - muffles. Basically exhaust enters through intake and is diffused by the inner pipe which has perforations all over it. It is also filled with fibre which I assume aids with the muffling.
Its quite simple once you've had a look inside one.