Picnic shoulder is a cut of pork that comes, as you might expect, from the shoulder area of the pig. But then, so too do cuts labeled "pork butt" (strange but true!). Cuts labeled "pork shoulder" or "picnic shoulder" are from the thinner, triangle-shaped end of the shoulder whereas the "butt" is from the thicker, more intensely marbled end of the shoulder. As such, picnic shoulder is a bit better for cooking whole and slicing whereas pork butt is perfect for making pulled pork and other recipes in which the meat is meant to fall apart.
Yet both picnic shoulder and pork butt benefit from long, slow cooking, and are great cut up and used as stew meat and in chilis. And you can, if necessary, use them interchangeably in most recipes. If a recipe calls for one, you can use the other. Picnic shoulder and pork shoulder are the same (with slight variations in how they are cut in different parts of the country) and one can be substituted for the other in recipes without worry.
Note: Many styles and regional variations exist in butchery, so when in doubt, ask your butcher for specifics.