Yeah to be honest, I never understood that. Google's serving things that will hopefully be more relevant to your interests and you might enjoy. Personally, I think it beats all the other ads about tips on how to whiten my teeth or lose 10 pounds.
A UK ISP got into trouble when it was (illegally) tracking all your web browsing and replacing each site's ads with it's own ads based on your browsing history. When it replaced the ads for a childrens charity on a national fundraising event with some targeted at 'gentlemen's special interest' sites there was something of an outcry