@WillG Amazon Product Ads gives merchant flexibility to leverage Amazon's loyal customers and actually capture some consumer data. It's a solid program for merchants, you should check it out if you're not listed there already.
It's one of the top ten shopping engines online (more like one of the top four). What is Amazon doing by offering it? Just like Luxoria said, their CPC rates are pretty steep so it's a cash cow for them. Their ads are displayed below marketplace products so they must be assuming that once a user scrolls down to a certain point they are still browsing for additional information or sources that sell that product.