An even more detailed way to look at is this:
The suggested daily budget is the amount that the program estimates you would need to spend, to safely allow your ad to show every time someone searched on any keyword - without over-delivering on your budget.
How is the suggested daily budget arrived at? To over-simplify for the sake of the conversation:
* The program estimates the number of impressions that each and every keyword in the campaign will get, which varies according to how it is targeted (broad, phrase, or exact).
* Then it applies a moderate CTR to that number of impressions, to arrive at how many clicks you are likely to accrue.
* Then it looks at your CPC for each keyword to decide how much you might spend for each click, in competition with others.
* Taking into account all the above, the system arrives at an estimate of how much you would need to budget in order to have your ad show every time, for every keyword, without exceeding your budget. This is your suggested budget.
If your actual budget is lower than the suggested budget, your ad will not appear every time. How often will it appear? Well, if your actual budget is $1.00, and your suggested budget is $2.00, then your ad will show about half the time. Delivery will be spaced out over the 24 hour day.
A great tip for lowering your suggested daily budget: reduce the number of keywords in the campaign, by weeding out low performers.