Nobody wants setbacks in their life. But everybody wants their heroes to suffer setbacks in their dramas. It's... you know... dramatic. And often these setbacks occur not because of some external force acting against the heroes, but because of internal conflicts that help to form their personality.
The problem comes in remembering that roleplaying games are drama, not life. When playing a character in a game, you identify with them far more than you do with characters you only read about in a book. You often won't want to have them behave in ways that will cause them trouble.
That's where Restrictions come in. Restrictions look an awful lot like what another game would call "Flaws" or "Disadvantages". They are things like "Arrogant", "Soft-hearted", and so on (a list for inspiration is at the bottom of this page). But most game systems give you a reward for your disadvantages up front, often in the form of character points. Here, we reward Restrictions only when they become relevant in play. Any time that you roleplay one of your characters Restrictions to significantly improve the story (usually by causing you a massive problem) you will receive a Drama Point, sometimes even more than one.
This solves two problems: First, it makes it impossible to rules-lawyer your Restrictions. In a traditional system you could say (for example) that your character was a womanizer, and get immediate benefit from that. But then if he had good in-game reasons for resisting a beautiful woman you would either have to disregard those reasons (and violate the subtleties of the character) or disregard the disadvantage (and risk angering your GM). In this system there's no such conflict: You've got the Restriction womanizer. If you choose to play it then you are rewarded. If you choose not to play it in a particular instance then there's no reward, which is also fine. A character who lives in a monastery won't get as many points from it as a character who leads an Amazon army. All of that is as it should be.
Second, it helps the players to do the things that are to their character's disadvantage. It's sort of like Scooby-snacks. Scooby Doo doesn't want to go into the haunted house, but if he's offered a Scooby-snack as a bribe he'll do it. Most players, even with an arrogant character, don't want to mouth off to Benedict... but if they're offered a Drama Point as a bribe they'll be much happier about the prospect.
Also, remember that the Actor can have certain disadvantages, and the Role can have others. You choose if they carry over, though in many cases, it makes sense for certain character flaws of the Actor to carry over even as he assumes a different Role.
So, without further ado, here's a list of possible Restrictions. These are just examples... many others could, of course, be useful for defining a character: