A panoramic head allows you to easily rotate a camera around the nodal point of its lens. This enables you to create panoramic photographs without having to worry about parallax errors.
My A70 pan head is made from 12mm MDF. It's just a simple L-bracket, attached to a rotating base. If your tripod has a pan/tilt head, you could use the tripod's own pan rotation to do panoramas. But if you're not on level ground, the tripod's axis of rotation may not be vertical so you can end up with a horizon that's not straight. Incorporating the rotating base into the panhead gets around this problem. You can use the tripod's pan/tilt to level the pan head; then you can guarantee the rotation will be in the horizontal plane.
The vertical lines on the upright of the pan head are to help position the camera perfectly vertically. Alternatively, I can use the angled lines to gauge how far the camera is tilted up or down.
The camera mounting hole is slotted, so that the camera can be moved back or forward to put the nodal point of the lens above the axis of rotation. The table pasted onto the side of the pan head tells me what mounting position is required for each focal length of the zoom lens, both when the camera is upright and when it is tilted at various angles.