We just went last week, and since we had grandparents with us we didn't need to use it as much as much as we normally do, but we did a couple of times and it worked ok. For the rides I can remember (RSR/BTMRR), they will want to see the nonrider with the baby/stroller/whatever. Then, they will add 3 new fast passes to (in my experience) ANY 3 tickets in your party. So, she might scan new FP onto tickets for person A, B and C, but person D, E, and F can use them. It didn't matter, just be sure to keep track of which tickets have the extra fastpass.
They did come with return times, and ours for RSR was an hour out from when party #1 got off the ride. I went to the CM and said "my RS says we can't reride until an hour from now. Is that really the case?" and he waved us right on. It seems to me they don't particularly care and the return times are super arbitrary anyway. I wouldn't try to come PAST your return time, but earlier than return time they have tended to honor it and not care.
I do think there should be a better way to handle this because it seems to be wasting a lot of time (i.e. I was less inclined to take my toddler on a ride while the big kids were riding because we had a specific return time for the FP) but it wasn't the enormous dumpster fire I expected - especially considering the maxpass thing in general has many CM's befuddled as it is.