PPC or pay per click advertising is in which an advertiser has to pay everytime to the site owner or the search engine, which displays their ads, their is a set amount for the site which displays their ads.
There are actually different types of PPC ads, but one is the most common type of advertisement which is paid search ads.
Paid search ads is basically when you search something if search engine like Google and the tabs which has written "Ads" on it is basically the paid search ads.
For example if you search best Italian hotels then the links which features "Ads" are basically paid search ads.
It is to be noted that all these advertiser are charged when someone click on these advertisements.
There is entirely an automated process also know as Ad Auction which deals with the relevance and validity of the advertisements.
Ad auction is basically a budding system this means that advertiser must bid on the terms that they want to trigger which are also know as keywords.