You are posting a $600 laptop on eBay, Craigslist, or Kijiji, and sell it to the highest bidder. You two get in contact and he seems like a nice guy, as he is fine with a traditional transaction, through PayPal.
He informs you his friend will meet you to pick up the laptop, as he is somehow unavailable. You are waiting for his friend, while keeping an eye on your PayPal account. A minute before the friend shows up, your PayPal account receives the money, as agreed!
Now you just have to wait to make sure he comes, so you can claim the money (transfer it from your own PayPal account to your bank account).
The man shows up, you shake hands, give him the laptop, and he leaves. You go online again, so you can transfer the money from PayPal into your bank account. Bad news is, the transaction has been reversed the second the guy left.
PayPal can reverse payments if they are not yet accepted by the person receiving the payment , and since you didn’t transfer the money into your bank account right away…the scammer just waited (probably in his car) for his accomplice to pick-up the item.
How to avoid: if the transaction is local (and you should only do local when selling on Craigslist), always ask for cash. If it is through paypal, tell the buyer he can pick up the item as soon as you have accepted the Paypal payment, and not before.