A solo miner with modest equipment might find a block once in a lifetime or never. Pools exist to convert that lottery into an income, and the method of conversion is where the interesting choices sit.
Shares measure work below the real target
Finding a block means producing a hash below a very demanding threshold. A pool asks members to submit hashes below a much easier one.
Those easier results prove work was done without being valid blocks themselves. They are the accounting unit the pool pays against.
Since a share is a random sample of the same search, the count of shares a member submits is a fair proxy for the portion of the total effort they contributed.
Proportional schemes pay only when a block is found
The simplest arrangement divides each block's reward among everyone who submitted shares during the round that produced it.
Income is then still lumpy, because rounds vary enormously in length, and a member's earnings depend on when they happened to be connected.
It also invites pool hopping, where miners join early in a round when shares are worth more and leave later, diluting the members who stayed.
Pay per last N shares resists hopping
A widely used scheme pays against a rolling window of the most recent shares rather than resetting at each block.
Leaving forfeits the value of shares still sitting in the window, so there is no advantage to arriving and departing strategically.
Members still share the pool's luck, so a long unlucky stretch reduces everyone's income even though every miner did the same work.
Pay per share transfers variance to the pool
Under a full pay-per-share arrangement the pool buys each submitted share at a fixed price, whether or not any block is found.
The miner receives predictable income and the pool absorbs the variance, which requires the pool to hold reserves against unlucky periods.
That service is priced into a higher fee, so the miner is effectively paying an insurance premium for a smooth revenue line.
Fee income complicates the arithmetic
Block rewards now include transaction fees, which fluctuate far more than the subsidy and are unpredictable block to block.
Schemes differ in whether fees are shared, retained by the pool, or averaged, and the choice materially changes returns during congested periods.
Comparing pools therefore requires reading the fee treatment alongside the headline rate, since two pools quoting the same percentage can pay quite differently.