The reward pool increases from the daily creation of Steem ( approximately 40,000 to 50,000 every day ) that is created automatically from the programing . Approximately 75% of the new daily created Steem goes into the reward pool , some goes to pay witnesses and some goes to pay interest on Steem Power.
The pool decreases when more steem is used to make payouts than has been put into the pool . This is my basic understanding of how it works