It's a few things - it's CPC when you don't have a direct advertiser, and CPM when you do. Or it can be like a paid-link ad which costs the advertiser a flat fee for a specified period. I've only just started using it so can't quite say how good it would be. Sidetrack: TLA is my best source of income at the moment.
The ads are cheap enough, but my conversion rate never seems to be very high. I also wonder about how closely they monitor people clicking on their own ads. Across the board I might have a 0.1% CTR, but on a number of sites I'll see 8 ad impressions with 6 clicks. When you are using CPC I give them credit though for showing you exactly the number of impressions and clicks for each site your ad appears on.