The Pan American Games were to be first hosted in 1942, but World War II pushed the date of the first games back to 1951. The original idea behind them was to promote unity between the various countries of North and South America. Think of it like a regional version of the Olympic games, designed not necessarily to keep other nations in the world out as to allow nations in the Americas to promote their athletes.
The Pan American games are held every four years, like the Olympics, but a year earlier. There has been talk now and again about starting a Pan American Winter Games, but it never really goes anywhere (perhaps because so few countries involved actually experience snow.)
On a more basic level, the point of the games (as in all sporting competitions) is to win and boost national pride. The games bring together people from many nations in a spirit of cooperation and brotherhood.