In normal circumstances, dogs develop in the womb with a thin film called the pupillary membrane covering each eye. The idea is that since the animal is not yet sighted anyway, this won't interfere with vision and is the most efficient way to supply blood to the developing organ. It usually can still be seen once a dog is born but dissolves on its own within the first few days. In some cases, however, this membrane refuses to dissolve and can cause problems; this is known as a persistent pupillary membrane.
The membrane is made up of thin but tough strands of a silk-like film. Depending on how much of the membrane persists after birth, these strands can be located in any number of places and their location determines to a large extent how much of a problem the persistent pupillary membrane will cause. The strands can stretch across the entire pupil, from the pupil to the lens, from the iris to the cornea, or they can be free-floating, attached at only one eye. Strands that span the entire pupil are generally not a big deal at all and aren't thought to cause any serious impairments to vision, but the other types of persistent pupillary membrane can be cause for alarm.
Persistent pupillary membrane is diagnosed by observing the dog for signs of vision problems and the appearance of small white spots in the eyes. If these are present, the veterinarian will use a device called an ophthalmoscope on your animal in order to determine the point of attachment for the parts of the membrane that persist.
Depending on the location of the remaining membrane strands, persistent pupillary membrane can lead to the development of "blind spots" that can seriously affect a dog's vision. This can be especially problematic if the dog was intended to perform some type of work or be a hunting dog. Cataracts can develop in some cases, but these can usually be spotted early and effectively combated. Perhaps the worst possible scenario with persistent pupillary membrane is that the membrane strands trap fluid in the cornea and cause swelling, which will eventually lead to a ruptured corneal wall and complete loss of vision.
There is generally no treatment for persistent pupillary membrane, but in most cases, there is no real problem either. Only in the most problematic of cases will vision be significantly impaired, and if cataracts develop, they are treated with surgery, the same as they would be in any other animal, usually to great success.
Breeding an animal with persistent pupillary membrane is generally discouraged, but some breeders argue that if the animal's close relatives are closely examined and are all free from the disease, then the chance of passing it on is negligible. Ultimately, one has to exercise one's own judgment.