A quick definition of the “permanent generation”:
“The permanent generation is used to hold reflective data of the VM itself such as class objects and method objects. These reflective objects are allocated directly into the permanent generation, and it is sized independently from the other generations.” [ref]
In other words, this is where class definitions go (and this explains why you may get the message OutOfMemoryError: PermGen space if an application loads a large number of classes and/or on redeployment).
Note that PermSize is additional to the -Xmx value set by the user on the JVM options. But MaxPermSize allows for the JVM to be able to grow the PermSize to the amount specified. Initially when the VM is loaded, the MaxPermSize will still be the default value (32mb for -client and 64mb for -server) but will not actually take up that amount until it is needed. On the other hand, if you were to set BOTH PermSize and MaxPermSize to 256mb, you would notice that the overall heap has increased by 256mb additional to the -Xmx setting.