paypal is a payment processing site. basically anyone with an email address can send and receive online payments. To do this you need to use your credit/debit card or bank account.
You can use it for payment for the purchasing of products i.e. ebay
it does not cost to send money to someone but it does cost to receive (3% or something)
We always use paypal for ebay, it just basically uses your credit card to pay for things straight into someone elses account, remembers your details etc.
Just keep a close check on you account!
I have been notified by Ebay 3 times in 4 weeks to change my password as my account is unsafe!
To be honest when I use ebay I just send a cheque, okay you wait a few extra days for your purchase but then no horror stories like people getting money going out of their paypal account 6 months later.