From Bioinformatics.Org Wiki
PAM (“Point Accepted Mutation”) substitution matrices were developed for specific amounts of change or molecular evolution (without time being specified). They were determined by the global alignment of sequences that differ by less than 85%. One PAM represents a 1% change in all residues or one Point Accepted Mutation per 100 residues. The matrices are scaled from there, so the PAM100 matrix represents 100% change, the PAM250 matrix represents 250% change, and so forth. One matrix is chosen which may best represent the actual evolution that occurred between two sequences, but that cannot be determined in advance. Generally, larger matrices are used for more distantly related sequences, but the comparison is not direct, as mathematical extrapolation is used.