ETFs: What is Tracking Error? 

Very well explained.

Tracking Error does not tell you how "closely" a Portfolio tracked a benchmark. For example, Portfolio A could have a consistent tracking difference to the benchmark of 1% and Portfolio B could have a consistent tracking difference to the benchmark of 10% throughout the measurement period. Both Portfolios will have the same Tracking Error of 0% (i.e. no volatility). If you want to know how closely a Portfolio's performance tracked a benchmark, use Tracking Difference. Use Tracking Error if you want to know how consistent (low tracking error) or how variable (high tracking error) a Portfolio's tracking difference was relative to a benchmark.

Good explanation