Sourced From https://adwords.google.com/support
What is demographic site selection?
Demographic site selection is a way to find and run your ads on sites with the right audience for your AdWords campaigns.
A demographic group is an audience that shares a particular trait or characteristic. This trait might be age, gender, income or some other factor. If your product appeals to young women, for instance, you might want to target sites which are popular with the female demographic, the 18-24 age demographic or both.
With the AdWords site tool, you can choose your preferences in up to three different demographic categories. The system will analyse your preferences and create a list of available Google Network sites that are popular with that audience. If you select multiple demographics, the AdWords system will look for sites that match all your preferences. For instance, you might ask the site tool to look for sites that are popular with users who have children or for sites popular with men earning a high income. The site tool will then return a list of sites whose audience tends to match those demographic descriptions.
The demographic site selection option is found on the ‘Identify sites’ page when you create a new site-targeted campaign or on the site tool in an existing site-targeted campaign. In both cases you will also be able to use two other options to find sites: listing site URLs and describing topics that match your ad. We recommend using those methods along with demographic site selection to identify the very best sites for your ad to appear. For more detailed instructions, please see this Help Centre entry: How do I use the site tool?
The demographic website data used by AdWords comes from comScore Media Metrix, the respected marketing information provider. For the time being, AdWords has demographic information on users from the United States only. For this reason, demographic site selection is available only for campaigns which geo-target users in the United States. If your campaign does not geo-target the United States, you will not see the demographic option on the site tool.
Please remember that demographic site selection cannot guarantee that your ad will reach only the exact audience that you select. Most public websites get a variety of visitors. However, demographic site selection will help you choose sites on which you are very likely to find the people you want to reach.
How to use it:
https://adwords.google.com/support/bin/answer.py?answer=21716