There is a WebmasterWorld thread asking why do some Google AdSense ads have a link near them that read "Hide These Ads." When you click on the link, the ads disappear and then a link changes to "Show Ads."
I took me a bit of time to track down sites that do this, but it wasn't that hard. A couple searches and I found many sites that do this. One example is wikihow.com, which has many AdSense ads on the site and they all show the link. Here is a screen shot of one of the ad units with that link:
When you click on the hide ads link, it then changes to this:
I am fairly confident that this is not a native Google AdSense feature, but rather something coded in by the site owners. Is it against Google's terms of service - I don't know. If it is, I don't think it should be. It is a nice feature that the site owners are offering to their readers, to hide the ads.
Forum discussion at WebmasterWorld.