Contextual advertising is a form of targeted advertising where ads are displayed to users based on the content of the webpage or app they are currently viewing. It works by analyzing the text and other elements on a page to identify key themes and keywords. These identified themes are then matched with a database of relevant ads. For instance, if you're reading an article about gardening, you might see ads for gardening tools or seeds, demonstrating its relevance. This method ensures that the advertising is highly relevant to the user's immediate interest, leading to higher engagement and a better user experience, ultimately benefiting both advertisers and publishers.