These types of promotions have a number of forms but mostly you will be involved as a publisher. As a publisher you you will earn your commission when a visitor to your site follows a link on your site to another site and then purchase something. Other kind is where you earn money when a visitor to your site or blog takes some action. Those actions could be something like: Leave their email, download and install some software, complete a survey, fill out a form etc.
When a visitor to your site buys something or takes action that earns you commission is called a conversion. There are number of ways to track conversions. One way of tracking conversions is when you as a publisher use a link with a code that is unique to you and this code makes possible to the advertiser to keep track where do conversions come from, which is usually done by so called cookies. Other way of tracking conversions is when through a coupon code. The advertiser gives a publisher a coupon code that helps track conversions. This coupon code is used by the readers of your blog when they purchase stuff or take some action.
Lets take for example you become affiliate with someone selling a digital product like an ebook about whatever. You are given a coupon code and you start promoting the ebook.. When the visitors to your site or blog purchase the ebook through a link on your site the use the coupon code and you earn commission for the sale.
Affiliate marketing is preferred by both the advertisers and the publisher, each from their own stand point. Advertisers like it because affiliate marketing helps them save money on advertising. This they only get to pay the publishers when a sale is made. Although the advertisers make less money per sale in the end they earn more money because they sell more products through affiliate marketing than they would sell by themselves