The photo pass card is something they give you when you have one of the Disney photographers take your picture (i.e. in front of the castle on main street). They will give you this card after they swipe it through their camera machine. It is like a plastic gift card like thing. You can then go to the Kodak building on main street to see you picture (or specific locations at each park).
You can give it to any WDW photographer when they take your photo and they "load" it onto that card or they will give you a new card. You can also view them online.
We used ours at the main street location, Ariels Grotto, at Morroco to see Jasmine and Aladdin. Just be sure to write down the number on the back of your card in case it gets lost.
I also took my own pictures at the character meet and greets so I wouldn't have to buy the prints from the Photo Pass program.
When we got home we looked at our pictures online and we had the option to show them to anyone with an email address so it was a fun way to show some pics of our trip.
The pictures were not too expensive and the shipping was not too expensive.
The picture we took on Main Street had a logo on it and Tinkerbell so I bought that one at the Park that day.
