'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.