This is intended to be a quick 'beginner's guide' to the ballot. Most of it is also on the FAQ, and if you have any more specific questions you might find an answer there. Alternatively, e-mail me and I'll get you an answer ASAP!
Accommodation at Pembroke
All undergraduates at Pembroke can stay in college-owned accomodation for their full degree, whether 3 or 4 years long. Students that continue after graduation (which includes medics) are counted as graduates and their accommodation is arranged separately. I don't know anything about it, but some info can be found here!
All first year students live in college. Some undergraduates remain in college during their 2nd, 3rd or 4th years, but the majority live in nearby houses ("hostels") which are owned by College. All houses are equipped with a kitchen, but most do not have a living room, and bedders clean the rooms regularly (as in college rooms). The houses are variously located - some are very close to college (e.g. Pembroke Street or Fitz Street) whereas others are a little further away (e.g. Selwyn Gardens or Panton Street). The furthest undergraduate hostel is 20 minutes walk from college, so none are terribly far!
First years choose their rooms for the second year by a random ballot. Beforehand, they can elect to form groups of up to 4 students whose names will be pulled out together. Balloting together does not mean you have to choose rooms together, or even that you will be able to. Equally, balloting alone doesn't mean you'll be living alone, especially as the vast majority of the first year choose rooms in either Selwyn Gardens (2 houses, one of which has 33 rooms!) or Panton Street (3 houses).
Students choosing rooms for the 3rd or 4th year of their course choose their rooms before students who are choosing for their second year. This means 2nd/3rd years ballot first, near the beginning of the year and 1st years ballot nearer the end.
For second years choosing for their third year, the order of choosing is the original ballot reversed, so every position on the ballot has its pros and cons! Third years choosing for their fourth year choose with the second years, and are randomly inserted into the ballot (again, in groups of up to four) between positions 30 and 99.
Students that have a year away from Pembroke in their 3rd year (such as language students) choose their rooms for fourth year in their second year, as though they were choosing for third year with everyone else. This means they will only be able to choose from rooms that haven't already been chosen by another second year choosing for third year (even though they're choosing for the year after - it just makes it fair!). They also have the option to re-ballot and be randomly inserted into the ballot between positions 30 and 99 with third years who are choosing for fourth year.
Choosing your room
The actual choosing of rooms happens at weekly meetings organised by the JPC Hostels Rep. About 25 students are invited to each meeting, beginning at the top of the ballot and working down. At a meeting, people are called up in ballot order, select a room from those still available, and sign for it. Couldn't be simpler!
Of course, deciding which room you want is a bit more difficult. The most important thing is to do your homework! A list of available rooms can always be found on the college website (here), and on display outside the linen room on N staircase - starred rooms are unavailable, either because they are reserved for scholars, first years, graduates or hostel keepers (one grad lives in each house and tries to make sure the whole house doesn't get destroyed in one wild party!). You should always be given a few days notice before the meeting, so try to go and visit the rooms beforehand (people are nice about it, honest!). If that isn't possible, the JP rooms database is a searchable database of rooms and comments on them from previous occupants. Just remember that you won't necessarily share that person's opinion of the room!
For the many people who come to the ballot meeting having never seen any of the rooms, or read anything about them, the hostels rep will try to bring as much information to the meeting as he/she has access to. This includes plans of some houses (currently only those on Fitz Street), and basic info about the houses. Also, they're usually a second or third year, so may have experience of the houses you are considering - often worth an ask!
The scholars' ballot
People who get Firsts at Pembroke are entitled to choose a room in college. A number of rooms are set aside each year for the summer scholars' ballot, and these are released only after exam results are published. At this point anyone with a First can relinquish the room he/she chose for the 2nd/3rd year, and instead take one of these rooms. Alternatively, he/she can carry the First over to the next year, and choose a room for the 3rd/4th year in the November scholar's ballot, before the 2nd years choose for their 3rd year.
The waiting list
A consequence of the scholars' ballot is that not enough rooms are released at the time of first years choosing to accommodate all the undergraduates. For this reason, there are a number of places (around 20) on the waiting list, which is offered to anyone from first year. Those wishing to go on the waiting list must say this at their ballot meeting instead of choosing from the available rooms. Those on the waiting list wait until the summer holidays to choose their rooms (after results have been released and scholars have made their choice). Then, after the scholars have chosen, any remaining scholars rooms plus the rooms vacated by those who took their scholars rooms are offered to the waiting list in order. The disadvantage of this is that you have to pick during the holidays, and so you can't go to see the rooms. The advantage is that you are often able to get a nicer room - for instance, Fitz St rooms often come up on the waiting list.
The waiting list is offered to more people than there are places. As a result, entering the waiting list is (usually) a choice rather than a necessity. At the very bottom of the ballot, however, all accomodation has to go. This might mean there are no more places on the waiting list, so you have to pick an available room, or it could mean that there are no more available rooms so you have to go onto the waiting list. This is unfortunate, but in consolation, you get to be at the very top of next year's ballot, which is a huge advantage when picking for your 3rd year.