Ad shecheduling allows you to schedule the display time of your ads. You can choose what hours of the day and what days you want your ads to run. For example you can choose to display your ads only weekdays between 9am-5pm. There's also an advanced mode that allows you to set up your CPC and make it vary according to the period. Let's say you want your max CPC to be 150% of your current max CPC during lunchtime you can set up: Monday 9am-12pm = 100% CPC Monday 12pm-2pm = 150% CPC Monday 2pm-5pm = 80% etc.
Ad scheduling has been well described so I'll just comment on why you might use it. The most obvious example is where you're running a campaign that targets a business running office hours. There's no point showing an ad that leads to a 'phone us' landing page if there's no one there to answer the phone. A reason that's less easy to describe might be where you're targeting a specific demographic and you have good data to suggest they're about on the web at a particular time (or times). Scheduling can become particularly important when your budget is restricted. Running ads at only certain times of the day allows you to use the budget more effectively - offering better CPCs - and you can do this either by simply starting and stopping the ads showing or, as already mentioned, by using the advanced feature. Whether this is appropriate depends on your particular campaign. Once you've been running a campaign for a while you'll be able to gather time specific data and if this suggests that your conversion rates are higher (or lower!) at a particular time of day, it's well worth considering some form of scheduling. Jon