The Calvin-Benson cycle (in "normal", C3 plants) consists of three processes:
1. The fixation of CO2 onto a 5-carbon "receptor" (ribulose 1,5-bisphosphate, better known as RuBP), which results in two 3-carbon molecules ( a sugar-phospate called 3-phosphoglycerate, or 3PG), a reaction catalyzed by the protein rubisco.
2. The reduction of 3PG to form a carbohydrate, glyceraldehyde 3-phosphate (G3P).
3. Regeneration of the original receptor, RuBP.
Every "turn" of this cycle, one CO2 is fixed.
The problem comes in the first part of the cycle, where rubisco is used. Rubisco can either grab onto CO2..._or_ O2. If it latches onto CO2 as it should, then the first part of the cycle produces 2x 3PG, as it should. If it latches onto O2 instead, then the first part of the cycle produces one 3PG, and one glycolate. Now, C3 plants have evolved ways to reclaim at least some of the carbons channeled away as glycolate, by feeding glycolate through a peroxisome and a mitochondrion, where it undergoes several transformations and some of it is released back out as CO2 (this is the pathway called photorespiration). However, it reduces the net carbon fixation by about 25%.
Rubisco has about 10x more affinity for CO2 than it does for O2, so under normal circumstances this is not a problem. However, on very hot, dry days plants close the stomata in their leaves in order to minimize the loss of water -- and this interferes with gas exchange as well. As CO2 is used up by the normal Calvin-Benson cycle, the balance of CO2:O2 inside the leaf alters in favor of O2, and rubsico starts to grab it instead. This both slows down photosynthesis and reduces its carbon fixation overall.
The C4 plants have introduced an extra bit into the Calvin-Benson cycle, an extra early reaction that fixes CO2 into not *3*-carbon sugars, but *4*-carbon sugars called oxaloacetate (hence the names, by the way, C3 for 3-carbon and C4 for 4-carbon sugars) -- by plunking CO2 onto a different receptor molecule (phosphoenolpyruvate, or PEP) by way of the enzyme PEP carboxylase.
PEP carboxylase has two advantages over rubisco: it has no affinity for O2 at all, and it finds and fixes CO2 even at very low CO2 levels. And oxaloacetate has an advantage over 3PG, in low-CO2 circumstances -- some of it degrades to form CO2 again in the mesophyll, the cells which carry CO2 to rubisco.
As a result, the C4 plants can close their stomata to retain moisture under hot, dry conditions, but still keep photosynthesis ticking over at good efficiency.
CAM plants (from "crassulacean acid metabolism", because this mechanism was first described in members of plant family Crassulaceae) are a different kind of C4 plant. In the C4 plants described above, the fixation of CO2 into 4-carbon sugars and the further fixation of CO2 into 3-carbon sugars happens in different cells, separated in space but at the same time. In CAM plants, the two different kinds of CO2-fixation happen in the same cells, but separated in time. In CAM plants the fixation of CO2 into oxaloacetate happens at night, when it is cooler and the stomata can open to ensure a plentiful supply of CO2, and then the oxaloacetate is stored as malic acid. Then, during the day, the stomata close to minimize moisture loss, and the stored malic acid is reclaimed and turned back into CO2 to power the normal Calvin-Benson cycle.
