That's the way advertisement works on the web. You have a website, you host ads, google pushes its ads via your website and you get paid for it.

The phrasing text advertisement comes from the fact that this is quite an old initiative. Back then ads were a lot of really flashy blinking gifs or flash animations with sound. Google, in the don't be evil days, was promoting sober ads, just text basically.

Edit: by hidden I think they mean that those are secret

I'm reading that as "unknown to you, the advertiser."

I assume they don't want google to cancel their ads

It was supposed to work through click fraud on Adsense, back when Adsense had text ads.

(https://www.gwei.org/img/GWEI_SYSTEM.gif)