Chicken,
Basically,
You earn VPP for raked hands. The formula's a little messy so I won't get into it.
Your VIP level is determined by how much VPP you earn per month (or per year in the case of SuperNova and SuperNova Elite).
You earn FPP based on your VPP earned multiplied by your VIP level. For example, at Gold, FPP=VPP*2. (At Bronze, the default level, FPP=VPP)
You can spend FPP to buy stuff from the Stars store. There are bonuses available in the store, and that's why everyone refers to it as rakeback however if there's any merchandise you want you can sometimes get a better rate of return on your points, particularly if you consider sales tax (because you don't pay sales tax on Stars sore purchses which you would at a regular store) ie: When I got my TV I got way better value than any of the bonuses.
This thread does a lot of the math:
http://forumserver.twoplustwo.com/showfl...&PHPSESSID=