Short answer: start with keyword targeting to capture someone actively searching your topic; use product targeting when you want to show up on similar books' pages, capturing attention from your direct comparables.
Your ad shows when someone types terms you chose (or Amazon suggests automatically). It's the most direct way to capture active search intent.
Your ad shows on a specific book's page you select — typically one similar to yours. Useful once you've identified direct comparables with solid sales volume.
For an author with no historical data, keyword targeting (ideally automatic at first) gives clearer, faster information about which search terms generate real interest, before investing in capturing traffic from specific comparables.