Panning allows the signal to be distributed between two output channels or busses. 

From panorama. Placing the signal in the left-right stereo field. signals with equal energy in both left and right channels will appear in the centre of the stereo image.  Signals may be panned or placed by changing relative amplitude and/or through subtle time delays.  Time delay panning works best with headphone listening.

The centre position distributes the signal evenly between the two output channels and corresponds to the centre area between two loudspeakers.  Turning the pot counter-clockwise or to the left feeds more of the signal to the left channel and less to the right, with the resulting left shift in the apparent position of the sound between the speakers. A clockwise adjustment has the opposite effect of moving the sound to the right. This is, of course, dependent on correct wiring between the mixer, amplifier and loudspeakers.
  panning example