It's a lottery but you don't have to buy tickets. You just enter your postcode and if it is drawn you win money. You can only collect by visiting the site, but don't worry, a daily email is sent to remind you.
The prize money is generated by ad revenue on the site, which is itself generated by the traffic caused by users checking the draw to see if they've won. It works like a free newspaper, or free-to-air TV channel like ITV.