The optimize and rotate options are for when you have multiple ads in the same ad group, and how you want those ads delivered - if you choose optimize, it'll decide which ad is performing better for you, and automatically show that one most of the time.
If you want each of your ads to show roughly the same amount of time, regardless of performance, you would pick "rotate ads more evenly"
The main reason I use the rotate option is when I'm testing different aspects of my ads to see which convert the best. In order to do that, I need them to be delivered fairly evenly.
I was recently told by AdWords Support that there were "issues" with the ad scheduling. I haven't checked to see if that's still the case.