I don't know how it works in horses, but my sisters cat has that. I think they called it a Luxated Patella, though. There are four grades of severity. Here is part of an article on it:
Intermittent patellar luxation - occasional carrying of the affected limb. The patella can easily be manually luxated at full extension of the stifle, but returns to proper position when pressure is released.
Frequent patellar luxation - in some cases luxation is more or less permanent. The affected limb is sometimes carried, although the dog may walk with the stifle slightly flexed.
Permanent patellar luxation - even though the patella is luxated; many animals will walk with the limb in a semi-flexed position.
Permanent patellar luxation - the affected limb is either carried or the animal walks in a crouched position, with the limb partially flexed.
I think that if it gets too bad then they will need surgery and they are at a high risk for early arthritis and other joint issues because of it.
Proud owner of ~Mana: 6yo Arabian gelding~Pearl 13yo Arabian~Danzer 14yo Arabian mare~ Tiny mini filly