Using Audiences in SharePoint 2007 helps you to provide content in a more customized manner. Your defined audience will see the content while others that are outside of that audience may not see the content. As the SharePoint 2007 “Help and How-to” puts it:
By using target audiences, you can display content such as list or library items, navigation links, and entire Web Parts to specific groups of people. This is useful when you want to present information that is relevant only to a particular group of people. For example, you can add a Web Part to the legal department’s portal site that contains a list of legal contracts that is visible only to that department.
Targeting specific list or library items to audiences works in a slightly different manner than when targeting entire lists or libraries. To target a web part to an audience you simply Edit the page, Modify the Shared Web Part and specify the Target Audience under the Advanced section. Only members of the specified audience will see the web part on the page.
To target a list item for example, you must enable audience targeting on the list, specify the audience on the item and then present the item in a web part, usually a Content Query Web Part. Displaying the content in this way will allow filtering to occur. If you complete all of these steps except the last, presenting the item in a web part, then the specified audience will not filter the view of the item in the list. SharePoint list and library views do not allow filtering by Audience, and the list or library will display all items in the view regardless of the specified audience.
So be cautious, if your users have access to a list or library you will have to control visibility through permissions and obscurity rather than the use of audience targeting. That is, hide the list from common users and always display the content via web parts. Presenting content in this way is not always feasible, especially when you may have people from different audiences updating the list or library. The best option is to simply segregate the items into different lists or libraries by audience.