There are plenty of examples of obvious click fraud, people setting up dubious websites with advertising then using nefarious means to get clicks on those ads, companies clicking on their competitors ads to drive up their competitors' costs. And these kind of examples of fraud are quite possibly detectable by the companies who run the ads. But there seems to be a whole other bunch of other stuff that may also be considered fraudulent, or at the very least not valid clicks.
For instance, my daughter can now use Google to search for stuff on the internet but she has no idea of what the difference is between a sponsored ad and a normal search result and since she can't read everything, she just clicks on whatever she feels like. And, until she works out how to use my credit card, she won't be buying any Charlie and Lola gear from one of the sites she visits.
Or what about me when I see an ad for some dubious debt company or some get rich quick scheme and I click on the link purely to cost them some money?
Or what about those websites that try to disguise their ads as just another link on their site?
These may or may not be fraudulent, but I'm fairly certain Google and the other ad companies can't tell they aren't real punters who are actually interested in the website's offerings. Presumably companies will continue to pay up until they aren't getting a return on their outlay, which is definitely one of the advantages of online ads. And that being the case, it seems like one great way to stop these dodgy companies from advertising is actually to just click on their ads...