STV, RON and NFP
The Single transferable vote (STV) is a system of preferential voting designed to minimize "wasted" votes and provide an opportunity for you to be involved in the final decision - even if it is not your most favoured candidate.
To give you a bit of an introduction to how it works let's imagine a friend is going to a shop to buy their lunch and they ask you if you'd like anything. You quite fancy some crisps so reply that you'd like a bag of Salt & Vinegar, but if they haven't got any you'll have Ready Salted, Cheese & Onion will be okay, but if they have none, then don’t bother.
What you're saying is that Salt & Vinegar is your first preference, Ready Salted is your second preference, Cheese & Onion is your third preference, but if none of those three are available then you don’t want anything. This is essentially how the STV system works, you select your first preference as your favourite, but should that option be eliminated your second preference will come into play and so on. At any point you have three choices - to stop numbering, to select NFP (No Further Preferences), or to actively request that more candidates are found by casting a preference for RON (Re-Open Nominations) - in the crisps example this would be like saying “if they don’t have Salt & Vinegar, Ready Salted OR Cheese & Onion, can you go to a different shop and try there”. If you simply stop numbering and click VOTE, then the system will automatically log this and your final selection will be No Further Preference (NFP).
In our example your preferences are used to choose which of the available flavours you would like - in the elections the preferences come into play during each round of vote calculation. In order to win the election, (in general) a candidate must receive over 50% of the available votes. All votes are counted and if no candidates have reached that 50%, then the candidate who has received the least votes is eliminated. Your first preference remains active unless you chose the eliminated candidate- in this case, your second preference is looked at and transferred to that person. The process then repeats until one of the remaining candidates reaches the magic 50%.
So in a nutshell you allocate your preferences to candidates until you are either indifferent to the remaining candidates (stop numbering, NFP) or you actively want to suggest that none of the remaining candidates should be elected, and we should start the nominations process again - seeking different candidates (Re-Open Nominations or RON).