The LFO creates a signal, or rather modulation source.
In the form of an LFO it is a 'Low Frequency Oscillator', so it generates a waveform at a very low frequency.
Just the same really as the other oscillators, which are in the audio rate (20 - 20000Hz) this is a series of points, or levels, or values. depending on your outlook on life
In digital it is literally a series of numbers, but we are literally talking about signals. in old analog and modular systems we would be talking about a varying voltage.
anyway if you select a triangle wave for the LFO, you will find that if you plotted its output, it would resemble a series of triangles like: /\/\/\/\/\/\/\/
If you use the virtual patch, it is routing the output of that modulation generator - in this case the LFO, to modulate a particular parameter. in your example, pan.
then the synth sound seems to pan from left, to right, and back again, at the rate set for the LFO
For other sources, such as velocity, you are taking a number generated based on how hard you hit the keys, and routing that to something else. for example you would use virtual patch to route it to cutoff, then the sound would get brighter when you hit the keys harder.
The modulation assigned by virtual patch is added on to the actual parameter value, so for example if you panned slightly to the right in the first example, then the modulation would take it all the way to the right and only halfway or so to the left, because you've introduced an offset.
In the second example, you could decrease or increase the cutoff and the extra amount from the velocity would always be in addition to that.
so for example if you put the cutoff all the way up to the top, and had positive modulation from the velocity source, you wouldn't actually notice any difference because the cutoff is already maxed out.
