According to Think with Google,
In-market audiences is a way to connect with consumers who are actively researching or comparing products and services across Google Display Network publisher and partner sites and YouTube. To qualify someone as being in-market for a specific product or service, Google takes into account clicks on related ads and subsequent conversions, along with the content of the sites and pages they visit and the recency and frequency of the visits. In this way, Google accurately categorizes users so you can target those most interested in your offerings.
Watch this video to understand it better: