Oh so that means all the methods that we see for e.g. PPS etc. are based on ones own formulas?!
It means that payout distribution calculations are entirely done by the pool software, not by the bitcoin client.
Miners submit their shares to the pool software, the pool software validates them and logs them in a database for the relevant user. If the share is of high enough difficulty to be valid for a block, it is passed on to bitcoind (or whatever software is used to interact with the bitcoin network). The bitcoin-balance of each account in the pool is then calculated by the pool software again. If a user withdraws his balance, the pool software calls the relevant bitcoin API function to create and send a transaction.