It is called while the parameters for Button are being assigned:
command=Hello()
If you want to pass the function (not it's returned value) you should instead:
command=Hello
in general function_name is a function object, function_name() is whatever the function returns. See if this helps further:
>>> def func():
... return 'hello'
...
>>> type(func)
<type 'function'>
>>> type(func())
<type 'str'>
If you want to pass arguments, you can use a lambda expression to construct a parameterless callable.
>>> hi=Button(frame, text="Hello", command=lambda: Goodnight("Moon"))
Simply put, because Goodnight("Moon") is in a lambda, it won't execute right away, instead waiting until the button is clicked.