"The Adwords service was primarily aimed at placing ads next to relevant Google internet search results. But the plaintiffs said Google should have disclosed that ads would also appear in undesirable places such as error pages and undeveloped websites known as parked domains."
When you sign up for adwords, you can choose if you want your ads to appear in (1) search results and/or (2) the google content system (basically blogs and websites that use adsense). When an adsense user (a website owner) gets approved for adsense, they get approved based on one website and can then put adsense ads on any of their sites without needing any further approval. I can see how some people would abuse this and put their ads on garbage pages, but for them it's just a matter of time before someone reports them to Google for a TOS violation (use the little arrow attached to any adsense ad) and gets their account banned.
In short, an advertiser can easily opt to only have its ads appear in search results. If it agrees to have its ads appear on the Google content network, it runs the risk of its ads occasionally showing up on garbage sites. Of course, for most who pay for ads on a per-click basis, this won't have any affect because no one is clicking on the garbage site ads. And before anyone says anything about click fraud, Google is actually pretty aggressive about detecting that and disallowing adsense users from making money on illegitimate clicks.