If you want to use PayPal as intended, first take some time to read the User Agreement. If you're OK with that, then proceed with setting up your account - it works best if you complete the verification steps meaning you have confirmed your email address, linked and confirmed a bank account and credit card. Then you're ready to accept payments or money. If you don't verify your account, you can still accept money however, there are limits on both sending and withdrawing your money and any funds you receive can be held for up to 21 days.
Assuming your account is setup properly, when someone sends you money or you sell something, the money is deposited into your PayPal Account Balance. Once you have the funds, you can leave the money there, make an online purchase, send money to friends or family or withdraw the money to your bank account.
