[jtr]

Imagine you've bet some money on a horse. In the real world, the race is run just once, and you either win your bet or you lose it. But imagine we had a great horse-racing simulation, and we could take the race you'd bet on and re-run it 100,000 times. Each time we note whether you would have won or lost your bet. We keep a tally of how much money you would have won or lost on each of those bets. At the end of the process, we divide the total money won or lost over all those races by 100,000 to find the average amount of money you won/lost per race. That represents the equity of your bet: how much it can be expected to make in the long run, despite the fact that no single race in the real world actually has a "long run".

PokerStove and other tools like it work the same way, except for poker instead of horses. Instead of simulating many races, we simulate many different deals of a deck of cards to find out whether your hand and betting strategy was a profitable one.