Google is now offering "free today" ad-supported videos on Google Video. These videos, when purchased, can range from 97 cents to almost 15 dollars.
I remember when video ads were first announced in May, Google was almost labeled as hypocritical due to the lack of video or graphical ads on their own services. Google has now shown they are willing to display video/banner ads on their own services where it makes sense.
According to InfoWorld, Google does not match advertisements with videos at random -- advertisers choose which videos they want their brand to be associated with.
The "free today" page gives you a good idea what type of videos are currently being sponsored -- anything from Ask the Builder to Mr. Magoo.
When you choose to watch one of these videos, the player in which video is shown in contains a banner-type ad at the top and when the video is complete, a short video advertisement for the sponsor is then played.