People say "passt scho" here all the time. Does that mean "passt so" or "passt schon"? Is there any difference between using "passt scho" and whichever of those two it means?
It does mean "passt schon" and is simply Bavarian dialect. The "n" is just missing.
"Passt so" is afaik only used when it comes to money (when you disclaim your change). You can use "Passt schon" in this situation, too. But not vice versa.
I think people use it more in Bavaria. It is "passt schon", but it is used more like "it's okay" or "everything is fine" or even sometimes "whatever"
e.g.: 1. A: Bist du krank? B: passt scho'! (means maybe he's sick or not, but it doesn't bother him) 2. A: How's your work? B: passt scho'! (it's a more positive okay) 3. A: Sorry, I'm late! B: passt scho'!
... .. .
And I always heard the bayrisch pronounce it "basst scho'!" with "B" instead of "P"