At a very high level [I am going to grossly oversimplify here] it's ownership in the company to a degree versus a portion of profits. If I have 50% profit rights but 0% equity and the sells tomorrow for a million dollars I am entitled to nothing. On the other hand if it makes a million in sales after costs I get half. The exact terms as well as your jurisdiction have a huge impact on this of course; there are many ways to hybrid so you have some equity, some profit, etc.
When you're making money off of NET sales it's important to mitigate external decisions in your process. What I mean is you need to control what is considered profits. If he's paying you after taxes, bonuses and salaries you will, not only see dramatically smaller figures, but it's easy to cut you out by simply hiring more people in or increasing his own salary. On the other hand you may take a much lower percent to be paid after the specific variable costs [product, fulfillment, marketing, support].
Generally I like to structure deals a little higher in the chain to areas that seem reasonable. If you get too far down it stops being profit sharing and really should become more of equity ownership as you are taking a risk with every investment, new hire or dollar spent.
INAL and really suggest that as you structure a deal with someone who may have one sitting by that you at least consult one of your own. You can do the whole deal up until the signing the docs... but at some point you want more than forum opinion