The Ping Monitor sends out a typical ICMP 'ping' message to the specified host as often as is specified. If the host doesn't respond before the given timeout value, the configured actions are fired. Ping times are recorded for report generation, so you are given the option to simply fire actions and end the monitoring session as soon as the timeout is reached, or continue waiting (an extra 30 seconds) so the actual ping time can be recorded.
The host name is resolved each time the ping happens which allows this monitor to also watch DNS servers. The time to resolve an address is not counted towards the total ping timeout.