Q: How does a pagan know when it's midnight?
A: The 9:00 PM ritual is getting started!
In all seriousness, the phenomenon of Pagan Standard Time likely stems from the fact that many pagans, particularly those who are clergy and therefore have greater responsibilities, feel that in some cases, placing things on a rigid schedule is a disruption to the natural flow of events. Don't force the issue, they say; things will happen when they're meant to happen.
Another reason is that in some groups, raising power during ritual tends to do funny things to watches and other electronics, and so its members tend not to wear them as much. And if you don't have a watch on, and don't miss it, do you care as much what time it is exactly?
However, when things do need to be regimented and scheduled, PST is quite a hassle...