How does a Philosopher's Stone work? The Philosopher's Stone is said to be an alchemical amplifier, allowing an alchemist to perform perfect transmutations, bypassing the laws of equivalent exchange.

How does that work? Isn't the point of alchemy that you can only get as much as you give?
The first thing you need to understand is that the stone does not let you bypass the law of equivalent exchange, it is only an illusion. The stone itself simply acts as an amplifier. Note that when the stone is used, it eventually shrinks and loses his power. If it was able to bypass the equivalent exchange law, why would it? 

What really happens when one uses the stone? As we know, the stone 


   is made of living souls. 


Each time the stone is used, it lets the user to perform better than he/she normally would. Doing so, however, uses the power of the


   souls that were used to create the stone. Basically, each time you use it, you use a soul (well, maybe it's not exactly 1 usage-1 soul relationship, but you get the idea). When all the souls are used, the stone ceases to exist. Note that since one needs a lot of souls to create the stone, it usually lasts long enough.