It's pretty easy. You can select your target audience by gender, location, age group, and interest(s), and then select if you want to pay per impression or per click.

It is a good system (just as easy to use as Google's) and it gives good results. I've tried it, and that's why I'm bullish on them.

(It's worth noting that advertising has funded newspapers for hundreds of years, television for 50 years, and Google for 10 years and is proven to work in those cases. I shouldn't have to say it, but apparently some people continue to doubt that advertising is a reasonable funding model at all, regardless of the specifics of Facebook)

Another way to look at it: Do you think Yahoo or Facebook is more relevant to the average user, and what is the trend for each one, and what is the likely trend for advertising spend on each platform? (Note that Yahoo is currently worth $22 billion)