Everything we know about sensation indicates that it requires cells to react to a stimulus and cells to transfer that stimulus to where it can be experienced. If you cut the nerve cells between a man's hand and brain, he can no longer feel with his hand.
The panpsychist view is that there is experience everywhere, regardless of whether it reaches a brain or not. When you cut the nerves, the man no longer feels with his hand because he is causally disconnected from it, but the hand is still experiencing the same thing it was before - because it is still causally connected to itself. What the hand experiences is barely even related to what the man feels, because the structure of causal interactions within the hand (which results in the hand's own experience) is much different from the structure of causal interactions within the brain (which results in what the man feels). When there's pressure on the skin, the hand doesn't feel a "touch" as the man would understand it; the hand experiences something else, which the man probably has no words for.
In the panpsychist view, every part of your body has its own experiences, and what you call your own consciousness is only the experiences of a particular subsystem of the brain. There are plenty of others, even within the brain itself. The main thing that privileges that particular subsystem over all the others, is the influence that subsystem has over the rest of the body, allowing it, for example, to control utterances from the mouth.
What is the rock conscious of?
Consciousness results from the pattern of causal interactions within a system. You are conscious of the influence of certain patterns of neural activity upon other patterns of neural activity within your brain. If you look at a pen, in your brain is formed a pattern of activity that represents the pen. You are then conscious of this pen-representing pattern of activity, precisely because it influences other patterns of activity, such as those that allow you to speak about the pen or decide how to pick it up.
The meaning of the pen-representing pattern depends entirely on how it is situated in causal relation to the rest of the brain - just as the meaning of a word depends entirely on how it is used within a community of language users. Or, the meaning of a variable in a computer program depends entirely on how it causally relates to other variables within the program. It is this meaning, determined by the causal relations in the brain between the pen-representing pattern and the pen-grabbing or pen-talking-about patterns (and many others), that gives rise to the pen qualia.
And should those same causal relations be present in some other system, that other system would also have the same pen qualia.
In the panpsychist view, the rock is conscious of the causal relations within it, too. There are actually a lot of causal interactions within a rock. Most significantly, there are complex acoustic interactions as sound waves pass through the rock and are reshaped by it and bounce around inside it. It would take a powerful supercomputer to model these acoustic interactions at atomic fidelity; they are complex.
What kind of experience this actually is, is very difficult for us to say. We could try to map it to some part of the causal structures within the brain, and if we were successful in that mapping then we would be able to say by analogy that the rock experiences something similar to the experiences obtained from those brain-structures. But more likely, there would be no such mapping; there are probably no analogous brain-structures that have quite the same causal structure as is present inside the rock. So, we would lack words for what the rock experiences. We would be in the position of a man, blind since birth, trying to understand what the color "magenta" is. The rock's experiences would be as inscrutable to us as ours are to it.
The consciousness in the rock is the structure of causal relationships between components of the rock. It all works by familiar physics. Awareness is transmitted through the rock via sound waves in the same way that awareness is transmitted through the brain via spreading patterns of neuron activation. In the brain or the rock, consciousness is decentralized, the outcome of many interacting parts
