The WPS extension adds WPS capabilities to GeoServer, while the WPS-remote extension allows you to use "remote" processes. That is processes running outside of GeoServer.
You install it in the same way as any other extension by downloading the zip file and unpacking it's contents into the
WEB-INF/lib directory. You will also need to deploy a Python/XMPP wrapper on the "remote" machine to allow GeoServer to talk to your process.
A reference implementation of the remote end is available at https://github.com/geoserver/wps-remote, a configurable Python/XMPP wrapper for remote commands. The Python XMPP wrapper resides into the remote machine and is able to send a presentation of the remote process through an XMPP message by JSON-encoding into the body the process inputs/outputs parameter descriptors along with their type. On the GeoServer side the WPS Remote module automatically recognizes and loads an XMPP implementation of the RemoteClient. The GeoServer plugin is able to inquire for new available services, un-marshall their inputs and outputs and build appropriate process wrapper for GeoServer WPS to use. At execution time, the new Process is able to interact with the RemoteClient plug-in implementation in order to send a request to the Service.py, follow the status of the remote process and get the outputs at the end.
However, if all you want to do is deploy a python WPS you may be better off looking at PyWPS or ZooWPS.