Many free apps come with built-in ads, to give the developer some revenue for his work. Use this tag if your issue is related to this. Please visit the 'info' link below for more details!
What is this about?
App development consumes time and effort. But since many users don't want to pay for apps, or at least don't want to buy a pig in a poke (the Playstore's return window of 15 minutes is far to small to really evaluate an app), developers include modules for different ad networks to at least get some revenue for their work. While this is an absolute justified thing to do, it sometimes is causing worries or even issues -- due to the fact either how certain ad modules work, or what they have access to.
A list of available ad networks can be found e.g. at StackOverflow, and you will see it's quite long (and you might never have guessed that there are so many of them). All of them need to access the internet for obvious reasons (to obtain ad content), but most have an alarming combination of permissions they request (e.g. accessing personal information such as IMEI to identify you, and the location for "matching ads" -- which would even allow them to track you). Combined with unsecure data transmission to the ad networks server, this should be enough to rise some worries. An overview for some of those combinations can be found on page 4 of the document Investigating User Privacy in Android Ad Libraries.
And then there are some specialities like Airpush, which are clearly an intrusion into privacy: Suddenly you see ads pop up in your notification area (sometimes not even identifyable as such, but might be mistaken as system notifications for urgent actions to take), or additional icons to apps you've never installed appear on your homescreen. While a developer should certainly have the right to see some revenue for his work, ads should be restricted to appear within the application. Luckily there are ways to identify and get rid of stuff like that (e.g. the app AirPush Detector).
What this tag is intended for
If you have issues with ads appearing somewhere on your device where you have no reason to expect them, and want to identify the cause so you can get rid of it: That's a good reason to pick this tag. If you are concerned on how the permissions a certain ad module uses might violate your privacy, I recommend the "further readings" below.
What this tag is not intended for
You should not use this tag if your question is about how to use advertisements to generate a revenue -- questions like that are clearly off-topic here. Clearly stick with what's listed as on topic.