Pay Per Last N Shares groups shares submitted by all users into a "shift." A shift is currently defined as ~40 million shares. Once a shift is completed, it is considered an "Open Shift". After 10 new shifts have completed, the oldest open shift is closed.

While a shift is open, any blocks the pool finds are paid out to all open shifts (10% of the block per shift). This means that you will continue receiving payments on completed (open) shifts even if you stop mining.

With PPLNS, each open shift is paid the following:
((Block Value + Transaction Fees) / 10) - Pool Fee (3%)

This amount is then split evenly among all ~40 million shares submitted during the shift.

PPLNS involves variance: If the pool is lucky, you can earn a lot more than normal. If it's unlucky, you will earn a lot less. In the long run (a few months or more), you can expect to earn approximately 5% more using PPLNS compared to PPS.