There's a very good description of how it works a few pages back in this thread.
thanks, I found the post and it was very helpful. It explained everything.
I have another question though, you wouldn't happen to know how the ultracoin cg scrypt-jane miner works, would you? I mean in terms of the nature of the algorithm. I'm getting 200 less hashes today on the same intensity I was on a few days ago. does this have to do with the coins difficulty and something about scrypt jane or am I having issues? everything seems normal with my gpu.