The rituals surrounding the milonga are prized among dancers. Almost like a rite of passage that once you know and have put them into practice you feel like you have actually been admitted into the social realm of Argentine Tango.
Cabeza translates to “head” and a cabezeo is a nod of the head. This “codigo” or custom signals the invitation to dance. You do not need to approach someone to ask them to dance you can merely catch their eye, nod your head, and if there is a nod in response you have an agreement to dance. The follower will stay seated to wait for the nodee to come to her table to be sure that there is no confusion in a crowded milonga.
There is a lot written about this custom and in the US many argue for it and against it. The cabezeo means never having to say “no”. If you choose not to accept a cabeceo, you merely look away and no one needs to know.
Some milongas are small and it is convenient and expected to use the cabeceo. Other milongas are in very large dance halls and it is very difficult to cabeceo long distances. In this case the dancer looking for a dance (either the lead or follow) may approach who they would like to dance with and try to make eye contact from a closer distance. The goal is always to be subtle and polite. If you are at a milonga in a new city, observe to see what the locals are doing.
(Taken from the Tango Workbook Draft)
I want to make it clear at this point that I am not arguing the usefulness of this invitation, or the reason why it exists or why many people outside of Argentina (read mainly US, where I am most familiar) are very attached to this codigo. Tango etiquette and the infamous Cabeceo are part of the allure of the milonga! But I had a very interesting experience during my most recent trip to Buenos Aires.
I had the pleasure of taking several fantastic classes with well known teachers/dancers / performers. And the one remark that applies here is the following: “Times are different in Buenos Aires’ Milongas. Each milonga now has their own etiquette. Not every milonga uses the same rules.” And this applied to the cabeceo as well. There are milongas in Buenos Aires that are very ritualized and very adamant about los codigos. It is very clear from the moment you enter those milongas, I think you can feel it in the air, if you can’t see it right away. There are milongas where the women are seated by the hosts on one side of the dance floor and the gentlemen on the other, with the veterans or the faithful attendees sitting at their reserved and expected table every week. Ironically the spacing of these milongas usually adds to the ritual, as you often can not walk around and seek dancers out, you must be found at your seat or do the seeking from your seat, thus the cabeceo functions pretty well.
There are other 
milongas where you find dancers searching for their friends, (in a dimly lit crowded space) and the gentlemen will approach a table, wait for the woman to look at him and nod respectfully and sometimes even ask, “Bailas”? If the woman ignores his hangout out by her table, he moves on. (Just as there are milongas where the dress code is different.)
Other milongas are in very large halls, a cabezeo from your seat would be almost ridiculous, although it is done. As the ladies scan the seated gentlemen during the cortinas, you may spy a head nodding dramatically, emphatically and adamantly with eyebrows lifted in your direction. I think it is important to remember too that in Buenos Aires, if you do not live there and are only visiting, that you are entering into their weekly ritual. Dancers have milongas that they regularly attend and expect to see their friends and favorite dancers there. I always recommend that if you go to Buenos Aires, you must go for no less than 3 weeks and make your schedule milonga -filled (if that is your intention, which usually it is). Dancers will begin to recognize you and you will see what the etiquette is for those milongas you attend.
Generally speaking the milonga rules and codes are good ones. They respect others, the flow of the dance, and yet, the cabeceo is the one that people have the hardest time with. It takes a little practice and it’s not so unfamiliar to us in this culture. I see it among the young crowd in a “hey, what’s up man”, accompanied by a nod of the head.
Happy Dancing!
(Quote taken from The Tango Workbook that is currently in a draft stage.)