So what is a pad, exactly? Well, in its basic form it’s just a simple chordal keyboard part that follows the chords of your song, its function being to fill out some aspect of the production sonics. What a given pad fills out exactly varies from case to case, though. An important part of the effect is usually in the frequency domain, where the concordant harmonics are capable of filling in spectral gaps and smoothing harshness. But there’s more to many pads than that: the synth can also appear to increase the sustain of chordal instruments such as rhythm guitars and keyboards, and it can also be used to exaggerate the sense of stereo width in your mix.Overall, it's very informative article (I like that part about "Stereo Width") with some audio examples included.
Article: Sound On Sound - Creating & Using Synth Pad Sounds