Paypal payments standard passes data through hidden form elements. To pass options you would use hidden form elements named "on0" and "os0" and "on1" and "os1". I think it only supports up to two options.
So for a large red item you might add this to the form:
<input type="hidden" name="on0" value="size">
<input type="hidden" name="os0" value="large">
<input type="hidden" name="on1" value="color">
<input type="hidden" name="os1" value="red">