Fraudulent traffic is classified into different levels of threat. Users that are spamming your ads with their fingers or doing another low level method of fraud will be classified as "Medium Threat". While, sophisticated fraudsters using advanced software will be classified as "High Threat".
IP security makes it impossible to know 100% who exactly is clicking on your ads. It could be Jim across the street or your ex business partner who is seeking revenge. However, based on their user behavior and actions that they perform on your webpage, it is easy to separate the spammers from real genuine traffic.