'Custom Callback' action is used to execute a PHP code.
To select custom callback, go to WordPress > Custom Callback option under actions.
This is how the 'Custom Callback' action UI looks.
Note: Every event has its own data which is passed to the custom callback.
Here's a Custom Callback in action on the 'WooCommerce Subscription: Subscriptions Before Renewal' event:
Here's another Custom Callback in action on the 'WooCommerce: Order Created' event:
This is how you can use custom callback within Automations.