Absolute PPP says the rate equals the ratio of price levels. Relative PPP says the rate should change at the difference between the two inflation rates, so a country with persistently higher inflation should see its currency weaken by roughly that gap over time.
The evidence is that PPP holds over long horizons and fails over short ones. Deviations of 20% or more can last for years because most of what moves rates day to day is capital flow, not goods arbitrage, and because a large share of any economy is services that cannot be shipped.
Its practical use is as a sanity check on extremes. A currency 40% away from its PPP level is not an entry signal, but it does tell you which direction the long-run gravity points, and which side of the trade is paying for the privilege.
Example: a basket costs $100 in the US and GBP 80 in the UK, implying 1.25 dollars per pound. With the market at 1.3000, sterling is about 4% expensive relative to PPP.
Related: law-of-one-price, big-mac-index, real-exchange-rate, real-effective-exchange-rate