These expressions (named after similar things in Unix shells) are another way of writing string literals, often useful for large strings. Everything from `` to '' (including newlines and backslashes, but not $ characters) is treated as literal text, and layout is ignored. The exception is the $ character, so that you can embed the value of the variable var in the string by writing $(var). To get a literal $ character, write $$ — single $ characters are not allowed.

When the +H option is given, the following

letter name = ``Dear $(name),
Here are some characters: \ ' ` ".
To learn more, send $$10 to the address below.''

is equivalent the Haskell 98 declaration

letter name = "Dear " ++ quote name ++ ",\n\
              \Here are some characters: \\ ' ` \".\n\
              \To learn more, send $10 to the address below."

The function

class Quote where
    quote :: a -> String

(basically no change for String and Char, and show for everything else) comes from the Hugs.Quote module, which also defines several common instances, and should be imported if you use the $(var) form. (This module also requires the -98 option.)