Making the background blur is essentially an issue of DOF, which shockk has explained.

Understanding DOF itself is one of the basic tenets of photography, there is no mystery to it.

The simplest way i can put it is: longer focal length + larger aperture = smaller DOF (which makes both foreground and background objects blur).

Obviously if your camera has no adjustment for focal length or aperture, your control of DOF is limited. This means taking nice pics with a typical mobile phone camera is much more challenging!