Monsters have fewer surges and wounds (recall that surges basically equal wounds since a wound counts against max surges) than PCs. This is fair because monsters tend to show up in only a single combat while PCs are expected to keep trudging along. Many monsters, like many PCs, have abilities that trigger when they suffer a wound or upon first becoming bloodied. These abilities allow them to spend the surge instead of it being wasted. For some monsters the ability provides healing and for others it will trigger an attack. Most monsters have two surges but some will have 1 or 3. Elites and solos gain additional surges and also have the ability for their triggered abilities to recharge.
Let’s look at a basic monster with two surges. At first, combat plays as normal. The damage threshold is high enough that it won’t likely be triggered unless a high-damage character scores a hit and rolls high. If that happens, a wound is dealt and the monster can either lose the surge or spend it. Most likely, the monster will spend it, triggering either healing (which it now needs) or delivering a big attack (which is exciting). The monster now has one surge remaining.
Assuming the monster isn’t bloodied, it probably fights on. It is unlikely that another wound will be dealt before it is bloodied and it has a lot left in it. Eventually, though, the monster’s HP are whittled down and it becomes bloodied, reducing its damage threshold. Now the monster is nervous. It has only one surge, no triggered abilities remaining, and a decent hit might deal a wound. It will consider fleeing unless there is reason to stay (like a boss that will kill it later if it flees). If another wound is delivered, the monster now has 0 surges remaining. Characters with no surges take a -10 penalty to their damage threshold because they are no longer able to fully defend themselves; any hit becomes a big hit. At this point, any solid strike is going to deliver a wound and send the monster into death throes. He flees.
This has three neat impacts on the game. First, it plays close to core 4e, but there is potential to end the battle quicker with well timed big hits. Second, it builds in a mini-morale system that makes sense and other rules (like intimidate) can piggy back on. Third, it facilitates those cinematic moments where the monster is fleeing and the archer lets loose an arrow at 100 paces that kills the foe *without* requiring the foe to be in that narrow window of HP where it works. Now, it works most times that it makes sense for the monster to be fleeing.
You can extrapolate from the mini example above to see how it would change if the monster had 3 surges or 1. It just makes them more or less risk adverse to the rest of the battle, but not until the PCs have either demonstrated their ability to deal big damage or whittled down the monster’s HP. Second, you can make minions just by producing monsters with 0 surges. One big hit kills them, but they continue to fight against many little hits. Any monster can become a minion just by starting it with 0 wounds. Finally, elites and solos, because they get more surges and the ability to recharge, become really exciting combats as you keep pushing them into bloodied (thereby reducing their damage threshold) but then are competing against the clock to deliver wounds before their abilities refresh and they heal above bloodied.
All in all, it is a fairly simple and intuitive change that has a really interesting impact on combat, pushing the tension earlier in the combat, resolving combats quicker, and naturally introducing a morale system that follows simple logic instead of rules that have to be memorized.