If you are not familiar with the Mathis Equation, I recommend you quickly go over my post article Mathis Equation and TCP Performance. This is necessary since the Padhye et. al. Equation is an extension to the Mathis Equation for accuracy of TCP throughput calculation over multiple scenario of packet loss.
As simply put, the Padhye et. al. Equation Equation is exactly the same concept as the Mathis Equation but taking in consideration the Maximum TCP Window size affected by received/lost/duplicate ACK, the initial retransmit timer and the effect of the TCP timeout mechanism on the total throughput.