Facebook has chosen to allow 3rd party advertisers to use of your uploaded pictures without permission as a default. Basically this means that your face/avatar may show up in a singles ad on your friends pages. It would have been nice if Facebook set the default to “no one” but they have chosen to enable this use of your photos by 3rd parties by default.
Managing your privacy on Facebook is a confusing difficult process and something you would do well to take a look at. There is a good write up at mashable on this subject.
You can disable the advertisers use of your photos by logging into facebook and selecting Settings -> Privacy, then choose News feed and Wall. There are two tabs there select the Facebook Ads tab and select “no one” and click save. Your photos will now not be shown in 3rd party ads.