One person buys a legal pay-TV subscription (e.g., Sky, Canal+, Digitalb). The smart card goes into a card reader/server. The server runs CCcam, reads the control words (CW) from the card, and sends them to clients. Clients can then watch the channel without having their own subscription.
Most exchange servers use automated scripts (like OSCam or CCcam with Exchange plugins) that track the ratio of shared data. cccam exchange