Kindle Unlimited is a subscription service provided by Amazon. Authors enroll their books in KDP Select (books only available at Amazon, no one else) and then those books become available to readers who are subscribed to the service by paying $9.99 a month.
Amazon sets aside a set amount of money each month that goes toward paying authors, called the KDP Global Fund. Payouts are based on pages-read, not a book being downloaded. These numbers are announced every month via Amazon.
Here are a few links to better understand the KU Pot and how it works.
Here’s a shareable infographic you can use however you wish, credit re: @anteriawrites or anteriawrites.wordpress.com.