Google will allow you to choose categories for ads you want to see. You can also tell them categories you don't want to see ads for. Advertisers can target ads to users based on past interactions they've had with them. Here's here https://www.youtube.com/watch?v=aUkm_gKgdQc
AdWords advertisers stand to have their ads more targeted and reach the right audience. AdSense publishers stand to further monetize their content sites by helping the ads succeed.
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Privacy issues will no doubt be discussed extensively no matter how transparent Google is about it and how much control they give users. When you get into behavioral targeting, some people are just going to be uncomfortable. Although,
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