Ans: Ad targeting enables you to reach the target audience that you want to reach with your ad. If your Ad Package allows targeting, then you will be able to configure (select) the target audience of your ad based on user profile fields. Once selected, only those users whose profiles match with your targeting criteria will be shown your ad.
Ans: No. You can choose whether to: select more profile fields, making the audience more specific; or select less profile fields, making the audience broader.