You'll be able to determine the severity of it as he gets older.  When picking out a yorkie, run your hand across it's back.  If there is anything but a straight line, I'd look elsewhere.   
Roached backs are hereditary.  It's in the genes, so two perfect parents can have puppies that have them.  It's a fault according to the standard and is frowned upon.   
Roached backs have a tendency, but not always the case, of longer legs, shorter necks and low tail sets.   
It isn't painful at all...just not attractive to the eye.  It doesn't take away from a pet, though.        |