It started long ago with some floppy-disk based games (?), and it came a long way from there.
Advergaming can happen in a variety of ways. You can find billboards on a race track of your favorite racing game; sponsored drink machines in simulation games; brand experiences like "driving an Audi" in Grand Turismo games or impersonating Noid (80's Domino's Pizza mascot) in an adventure game.
At first one could think games target a very limited audience - mostly geeky teenagers maybe. But the truth is that there are lots of other geeks gamers out there in other age groups. More than 30% of the online gaming audience is between 35 and 49 years old.
As I know we all have plenty of free time on our hands, you can find a list of advergames to explore here: