From my understanding, Google signs up advertisers to what is called Adwords. Adwords users pay money to run these ads so that they themselves can generate money by sending people to their websites.
The advertisments signed up with Adwords, is the source for the advertisments in AdSense, which is what HPA is running.
When an ad is clicked on, Google will pay the publisher (HPA) about half of what the Adwords advertiser is paying to run the ad. Google gets the other half.
Each time someone is interested in any of the ads and clicks on them, the website gets a few pennies and sometimes up to a few dollars, depending on how much the advertiser paid to advertise.
There is also something called "per thousand impressions". It means that every thousand unique visits your site gets as long as it has Adsense ads on it, the website will get paid.
I hope that explains it a little.
John, if I am wrong, please correct me.
Walt