(1) PASMO can be used in most railways, subways, and buses to pay fares.
In railways and subways, you can simply hold your device near the reader of an automatic ticket gate to go through, and the fare is deducted from the SF (Stored Fare). When getting on or off a bus, you can also simply hold your device near the reader and the fare is deducted from the SF (Stored Fare).
Check here for areas where PASMO can be used.

(2) PASMO can be used at most convenience stores for shopping in Japan.
Say "By PASMO, please" at a cashier and simply hold your device near the reader to pay from the SF (Stored Fare). PASMO is also available as payment at many establishments such as restaurants and shopping malls.