There are several variations to this effect but the method, with one exception that I'm aware of, is always the same. It's super simple and can be done totally improvisation once you understand the principle, which can be used in other effects btw.
P.K. touches were popularized by Banacheck I believe.
The classic presentation in the eyes of the spectator is to have 2 people sitting on chairs, blindfolded, at either side of the stage. The performer goes to one person and touches them. On asking the other person reports being touched in the same area although they were never seen to touch them.
Goatears is correct when it comes to the most basic version of the effect though the subjects needn't be seated. As I said, there are many variants to how this effect is created, one of the more clever is Colin McCleods which has not been published. Too, Ted Karmilovich has a very cool handling that's mind blowing.
Once you know the basics (and there are two primary methods) you can let your imagination play with it. . . there are routines, for an example, in which a Voodoo Doll is used vs. the 2nd participant . . . your main helper feels where you put pins into the doll.
Yes, there are at least two gimmicked methods some people incorporate in this routine. They are generally expensive, one far more expensive than the other. Both give "real time" reactions to the touch.
That really depends on what your presentation is, and what your intended venue is. And also how much risk you're willing to take.
I generally recommend starting with Banachek's PK Touches pamphlet. It's inexpensive and is a solid method. Work with that for some time and make sure you've got a good presentation to use.
This kind routine lives or dies on the presentation. If you just copy Banachek's patter it will probably fall flat. Personalize it, make it yours. Then you'll start to realize what methods should be used to enhance the performance.