In short, automatic matching is a new algorithm used to automatically target new keywords, not included in an advertiser's set keyword list, in order to use up all of the advertisers allocated budget. So if you are advertising for [Adidas shoes] and you have $10 left in your ad budget for the day, Google might decide to show your ads for search terms as far off as [slippers]. Like, I said above, there is a lot of controversy around it.
Google admitted that they will be expanding the very limited beta, as early as tomorrow. In both a WebmasterWorld and Search Engine Watch Forums thread, an official AdWords representative posted giving more insight into the expanded launch.
The Google representative clarifies that the expansion of this program will be "truly tiny." Explaining that "automatic matching" will not be going live for all advertisers, but will be expanded to a select number of advertisers, as a continued test of the program. Here is a quote from the statement:
What is happening: Automatic Matching has been in beta for some time as regular readers of this forum will know - and starting on May 20th the beta will be expanded somewhat. Even with the expansion of the beta, the number of advertisers who will see this beta option in their account is truly tiny.
Again, to be very clear Automatic Matching goes not go live 5/20.
The Google representative said they will be back today to post more details and address more concerns.
Update: We have more information from Google on this news. An AdWords representation said that those in the very limited beta will be notified on May 20th but the ads wont go live until June 3rd. They have all that time to opt out of automatic matching.
For the purposes of this limited beta, the feature is enabled by default. Please note, however, that automatic matching won't start running in these new beta accounts until June 3rd.
Advertisers being offered the beta option may opt out as early as May 20th (and, of course, at any time thereafter) - and, again, they will not receive any traffic before June 3rd.
Full instructions on how to opt out are provided in the email they will have received. Basically, though, advertisers who wish to opt out will want to uncheck a check box on the 'Edit Campaign Settings' page of each of their campaigns. They will want to do this before June 3rd if they want no automatic traffic at all - or at any point thereafter if they are not pleased with the actual results once they've seen them.
For more details on Automatic Matching, see here.