There are zillions
of sites out there running AdSense. It's possible few of them are in your niche, or are the types of sites you regularly visit, which may be why you don't run into them that often. But trust me, there are tons and tons and tons of sites out there running AdSense, covering just about every niche and topic you could ever imagine.
Seriously. Nearly every topic.
I know some people who have had great success with the content network, and others who after trying it won't come near it again with a 10-foot pole. It depends on what you're promoting and which sites carry AdSense. I am also told a good tactic is to bid separately on the search network and the content network; it's generally considered a good idea to bid less on content network ads in order to maintain profitability in that channel.
I believe you can select specific AdSense-carrying sites to target your ads to, if you don't want to simply allow any contextually-related page to display your ad. I don't know if you on the advertiser side can block sites from carrying your ads (I would hope you could), but I know for sure on the publisher side you can block ads from your competitors from displaying on your site. (I mean, if your ad shows up on a competitor's site, and one of your competitor's potential customers clicks through to your site instead, that doesn't seem to me like such a bad thing for you -- not so good for them, though -- so the motivation might be more for them as a publisher to block the ads than for you as an advertiser.
Generally speaking, though, the sites that carry AdSense aren't going to be selling sites, so they won't be your direct competitors. Selling sites don't want to take a chance on a customer seeing something interesting in the AdSense ad and clicking away (thereby making the site a few cents in revenue) when they could stick around and buy something (almost certainly making them more than just a few pennies).
Generally, AdSense carrying sites are going to be informational sites like blogs and forums and such. The usefulness is that potential customers of yours will go to these sites seeking information, and they'll see your ad, offering some product or service that's targeted to the topic of the page of information they've just read.
Some percentage of them will think, "hey, that looks like something I could use!" and they'll click through to your site. Some percentage of those
people will, with any luck, purchase something.
So you end up making more sales. And if you've bid correctly on the content network, you'll make enough profit on the sale to more than cover the cost of the clicks.