I'm no PPC expert but essentially you pay to have ads put in the sponsored listings located on the search engine results pages. Actually, you only pay when a searcher clicks your ads and arrives at your web sites, theoretically. Now this is a basic definition but that's about it.
I second what theor23 said. Relevancy is king. Most people when they start PPC don't hone keywords down enough. They focus on CTR. CTR is not king. CTR can lose you a lot of money if the traffic isn't converting. Two other things: 1. Start small and monitor CTR and conversion. 2. Figure out the profit available in your product or service after COGS (cost of goods sold). Then when you're looking at your overall PPC strategy the idea is your cost of acquisition should be less than your profit (by a lot hopefully). This difference makes up your ROI.