For those looking for a concise definition, here's how one gaming book defines pan:

Pan: short for panguingue (pronounced pan-ging-ee), a variety of card game grouped under the generic name of "rummy". It is a fast game which depends 75% on luck and 25% on skill..."

(It has specialized terms like "ropes" and "melds" which I can't define precisely. Have never played it, I am proud to say. The size limit of the game is called "kondition" (with a "k"). For example, the $2 and $3 chips used at the Plaza would be for $2 and $3 kondition games, respectively.

To answer the question, why not just use regular chips, it would take twice the number of $1 chips to run a $2 game (and 3 times, for the $3 game). Pan requires stacks of chips to play, so it's probably easier to operate with custom denominations. In older times, the poker or pan games might have been leased out to another operator, different from the casino operator, so different chips reflected the different ownership. This is not the case anymore, with modern-day Gaming approval for operators (excluding route operators, who may operate various games or slots in a small location.)