Hello Tam and welcome to the Forums.
Until someone who has behind-the-scenes knowledge responds, here is what I gathered from my experience when studying for the PMP using PM Prepcast. I would be happy to be proven wrong by learning from those in the know!
From my understanding, there is a large, single pool of questions from which all the quiz and exam questions are semi-randomly drawn. (The balance of question category is maintained for the exams, so it's clearly not totally random.)
There are a total of four Premium Exams that can be taken (for the first time), meaning a total of 720 questions that can be earmarked to be a user's exam questions. The option to include or exclude exam questions when setting up one's quizzes is to allow candidates to make sure we don't encounter a question first in a quiz, thus making the Premium Exam experience as fresh and challenging as possible. If one wasn't going to take the PM Prepcast exams but just wanted to practise using the quizzes, having the option to see the whole pool of questions within the quizzes would thus be useful.
I was introduced to the PM Prepcast PMP Exam Simulator in a preparation course, where participants were expected to take a certain number of questions per week outside of class and later to take the Exams in the final stages of our personal preparation. The course leader's instruction was to always exclude the exam questions from the quizzes, for the reasons stated above.
When comparing notes with the other course participants over the weeks, it became evident that each person was seeing different questions when taking the exams. Also, some people encountered a particular question in an exam, while others saw it in a quiz.
