Per diem, or "per day," is a Latin phrase meaning specific amount of money an organization allows an individual to spend per day. Typically, though not exclusively, this is to cover travel and subsistence expenses.
Many U.S. companies and organizations use the per diem rate guide published by the General Services Administration, which provides rates for a number of cities in the United States
Per diem is designed to cover the additional expenses you have of living away from home - basically having two residences. The IRS sets the maximum amount of per diem each year based on the location - for instance, NYC has a higher rate than Peoria, Il. Per diem is supposed to be paid on a daily basis, seven days a week, while you're at the remote location. It is not supposed to be tied to your salary, number of hours/days worked, etc. - just a flat daily rate. However, many brokers will try to save money by saying it's only for those days you work, or you get the full amount only if you work a full day, etc.
There are no ramifications if you later take a full time position with the company. In fact, you can collect per diem even if you are a full time employee, but are working away from home. You do not have to be a contractor.
They can continue to pay the per diem as long as you're working for them and maintaining two residences. However, if you do something like rent your house out while you're gone, you're no longer maintaining two residences, and no longer eligible for per diem.
Any tour of duty adding up to over 500 miles counts as a per diem. You can claim up to the per diem limit without receipts. Anything over this has to have records i.e. receipts. Note also that as long as you keep a record that $xx.xx was spent on xx-xx-20xx, then you do NOT need a receipt for any expense less than $75. A logbook and a pocket calendar is a perfectly acceptable method of tracking these "undocumented" (with a receipt, at least) expenses.