For starters, I would strongly suggest either hitting the Cisco web site or getting a book like the Field Guide to Cisco Switches.
Here is the official defination:
"Port aggregation protocol (PAgP) aids in the automatic creation of Fast EtherChannel links. PAgP packets are sent between Fast EtherChannel-capable ports in order to negotiate the forming of a channel."
If the ports are differing speeds and/or duplex, PAgP will change them to be the same.
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