PHRF is a "time on distance" handicap system (although there are now PHRF time on time variants).
http://www.ussailing.com/offshore/hcapsys.htm#PHRF
"The basic time-on-distance formula is: TA = ( D x PHRF ) / 60
TA = Time Allowance in minutes
D = course length in miles
PHRF = rating in seconds per mile
Subtracting the time allowance (TA) from the actual time it took the boat to sail the race (elapsed time or ET) equals the corrected time (CT)."

If two boats race, one with PHRF=57, and one boat with PHRF=84, then the fast boat, sometimes called "scratch boat" (PHRF=57) will have to "give" the slow boat 84-57=27 seconds per mile. So, for a 2.3 mile race, PHRF57 will have to finish 27*2.3=61 seconds ahead of PHRF84, or else he will get 2nd place. In medium size fleets and short races (45-90 minutes), where you know the PHRF numbers of all the boats you are racing against, and you know the race course distance, you can often be 90-95% certain of your handicapped finish, by keeping track of relative finish times of your boat vs others.

For race committee using PHRF (time on distance), it means you must know the exact (rhumbline) distance of race course. This is great for yacht club races around permanent marks.

In contrast, for beachcat races, and dinghy races where marks are set temporarily for more exact windward-leeward configurations, you want a rating system that doesn't care about distance. For these cases, time-on-time, such as Portsmouth, is often used. The disadvantage comes when computing the finishes, which while trivial to a computer, is almost impossible by the competitors. Thus the mantra "one design is where it's at".