Pretty much the same way the other ads do. I think it displays one book or the other with each iteration, using the criteria you set up at ad creation. It's a way to advertise two books without having to maintain two ads. If you have significant paperback sales, it's also a way to advertise both ebook and paperback formats in one ad.
When you hit three, you can also try sponsored brand ads. Those display three of your books at once and send clickers to either your author page or the all books page, whichever you specify. The one thing you unfortunately can't do is set up a series-centric one that goes to a particular series page. I haven't found those to be as effective, but that may just be me.
