The usual reason for a 'pending' payment in Paypal is that the payment has not yet cleared the banking system.
We usually see this when the buyer pays from a bank balance, in effect writing an "e-cheque".
Sellers are allowed to demand a return before refunding, but it sounds as if this guy decided not to get on eBay's radar by refunding without such a demand. Which is also allowed and sometimes sensible, for example where the cost of shipping is higher than the value of the item.
