An each way bet consists of two parts: the ‘win’ and the ‘place’. An equal stake is placed on each part. So you’re essentially betting on your selection to win the event, or finish in a number of places, e.g 1st, 2nd, 3rd, 4th etc. The odds for the ‘place’ are given as a fraction of the odds for the ‘win’.
So if your pick wins the race, you’ll receive a payout for both parts of your bet. If your horse doesn’t win, but still places, you’ll lose the ‘win’ part of your bet, but you’ll receive a payout for the ‘place’.
It’s important to check how many places a sportsbook pays out on, as this can vary.