Paypal payment plugin adds paypal support to Smart Subscriptions. Plugin uses "Classic" API NVP interface (with signature) to communicate with PayPal. You need a business PayPal account to accept payments. Read more about NVP/SOAP API credentials here.
Plugin configuration is quite straightforward: all field on "Account" pane are required, you have to provide your paypal account credentials. For testing you can use your "sandbox" Paypal account and switch account mode to "sandbox" if plugin options. It is always better to start in "sandbox" mode to test your environment.
Important: PayPal is now upgrading security standards and this plugin will work only if you have cURL PHP extension supporting TLS 1.2 running on your server.
You can check cURL version in Joomla administration / System Information - PHP Information tab, just scroll down to "curl" section, "cURL Information". If you have version 7.19.7 listed there (commonly used on some hostings) this plugin will not work! You have to update cURL, current version, e.g. 7.47.1 is OK. You can also ask your hosting provider if you have doubts. You will find more information about PayPal security updates here