karkadan - 9:48 am on Jul 29, 2011 (gmt 0)
I will keep it simple:
1. Emails from Google were botmade. No human being checked the sites when the email was sent. The bots sensed more ads could be added, so, that is why you got the email.
2. Why were you ban?
A. Advertiser noticed that he is not receiving a Return (sales) for the clicks on his ad.
B. He starts checking the sites were the ad is displayed. Notices that they are demo sites. He feels cheated. He demands your "head" to Google.
C. Google responds. If they feel you cheated, more or less, there could be total ban or partial ban.
YOU are responsible for your content, and for following TOS. And they can terminate the agreement any time they want, even when you are "right".