Sponsored items are just promoted items. You definitely only pay when they sell and the ads cost you nothing if the item doesn't sell.
It's worth paying twice on some items. I only needed to put my price up by 25c or 50c to cover the extra fees. I elected to pay less than 6% extra but they said the trending rate was almost 8%. I think the promoted items in my category are all Chinese or Thai goods as their prices are low enough that they can easily afford to increase the price enough to cover the extra fees. The extra fees are only on the item price, not postage, so that makes a difference too.
I see the overseas items being promoted but they don't often match the search, but perhaps this is because there aren't any relevant items being promoted and ebay feel obliged to fill the space with something. Where they have the five small pictures across the middle of a listing, the first three (four?) are usually sponsored/promoted items and I saw my own promoted there a couple of times. I can't remember how relevant they were at the time.
I think part of the problem is that too many categories have been merged and they don't look at the item specifics enough when they promote items so you end up seeing irrelevant items.
