Simply put:

FM - frequency modulation. This is the method of "preparing" signal to transmit is to the receiver
PPM - Pulse Position Modulation. This is actual "code" of the position of the control stick.

Here is the "picture" of what happened when you move the stick:

the position of the stick is converted to PPM signal. PPM signal is modulating a "carrying" frequency. The FM signal gets transmitted to the receiver, where FM signal is converted back to PPM “image”, and then into analog (level) signal which is actually moves a servo arm.

PCM is just another way of “encode” position of the control stick.

Here is the link where you can see both modulation methods side by side:

http://freespace.virgin.net/emhc.site/ppmpcm.html