I am sure someone will fill in the gaping gaps in my explanation, but we basically have to trade within a certain limit which is defined by our turnover. For example a rich owner can not just spend billions on players unless the club is turning over enough to pay for it. This will raise the question as to how chelsea, QPR and man city etc get away with it, the simple answer is they just do it anyway. I expect it is a mixture of having enough clout to pay the fines that may come their way, not actually believing anything will ever happen, having a reasonable case under law to challenge any such fine and having 150M odd given to them by the premiership each year anyway. There are also sanctions dished out to prevent teams buying players for a period of time I believe, Chelsea had one last year and couldn't procure a player for 2 or 3 windows (I think was FFP, maybe not though).
The teams that get relegated from the prem get 3 years worth of parachute payments, this is justified as they claim to have horrific wage bills when they go down and on championship income they are forced to go bust like pompey and others have done. The reality is that they went sh*t or bust in the premiership with no real financial planning and let harry redknapp loose with the cheque book as such is his way he ruined them, also most clubs build in relegation clauses into their pay structure so the parachute payments do nothing other than allow them to dominate the lower divisions.
MB has a different plan, by abiding by FFP we do two things, build a sustainable business model and avoid any potential shenanigans if the FFP becomes an issue.
Platini would have you believe that the FFP exists purely to avoid clubs getting into bother, the truth is that he did it to stop English clubs dominating because the thieving crook hates us. After the huge increase in prem money dished out this season he relaxed the FFP restrictions to allow the europeans clubs compete with us, if avoiding debt was the real issue he could never have done that.