buckworks - 12:35 am on Sep 19, 2013 (gmt 0)
don't know what "negative keywords" are
Negative keywords are words that you block because they are off target in some way.
A simple example:
If you were promoting designer widgets, searchers looking for used widgets might be unsuitable traffic for you. If you wanted to bid on more than just exact match searches, you could block the word "used" to prevent your ad from being shown on searches that mentioned used widgets.
Other words to block might be "vintage", "antique", "recall", "repairs", "lawsuit", "lyrics" and lots more. People who include such words in their searches are looking for something other than what you've got, so showing your ads to them would seldom lead to a sale.
You're right that you don't have to worry about negative keywords if you're only bidding on exact match, but on the other hand you might limit your exposure a lot if you only bid on exact match searches.
A well-developed set of negative keywords can let you bid on broad and phrase match to catch wider exposure yet still keep a lid on unsuitable impressions and clicks.
Re search versus display network: be sure to set up different campaigns to keep them separate.