On the support forums, Matt gave an insight into how ads are served at WordPress.com. The same approach is used in the Who Sees Ads plugin for WordPress Classic.
I’m glad to know about the plugin, which seems rather neat. But I’m still not a lot wiser about WordPress.com ads. The plugin allows you to specific a set of conditions under which ads will be displayed to someone who visits your blog. It’s not clear to me what conditions are in place at WordPress.com.
But, as I understand it, there will soon be a paid upgrade to WordPress.com allowing you to serve AdSense. I understand that the upgrade can be used to make your blog an ad-free zone. I wish the ad suppression was available as part of the CSS upgrade; after all, we CSSers at WordPress.com are already paying for control over how our site looks.