Err, what's PAE?
PAE (Physical Address Extension) is a "workaround" for letting x86-32bit(!) OS see more than 4GB of RAM. 4GB is the limit for 32bit memory addresses. PAE is not needed and not implemented on x86-64 processors when 64 bit ("long mode") is enabled.
How does it work?
In short, it simply adds 4 bits to the memory addresses (32bit -> 36bit) and one more level of memory-lookup-hierarchy, and: voila, OS can access up to 64GB ram (which is not science fiction these crazy days..). Of course, a single 32bit process is not aware, and would still only have a 4GB of virtual address space, even with PAE.
Performance penalty: yes or no, and how much?
I was given a task to research the PAE technology for recommending my company whether we should use it or not, especially performance-wise.