Each time a search query matches the keyword defined by an advertiser, ads are selected for bidding. Every instance after a successful auction when an ad is displayed is counted as an impression for that ad in Google AdWords. An impression is counted even when the ad is not the top or in the section of a search results page that is not visible to the user.
This ad displayed for Myntra is counted as an impression for the ad.
In this example we see 8 ads displayed for a search query backpacks. Myntra has 4 different shopping ads displayed, Flipkart has 2, Amazon and Chumbak each have 1 search ad displayed. Now each ad of Myntra gets 1 impression each. Likewise, both the ads of Flipkart get 1 each. Amazon and Chumbak get 1 each for their ads.
Note: In search campaigns, only one ad per domain is displayed even if the subdomains are different. Even though abc.xyz.com and def.xyz.com are different sub domains, AdWords will only show one ad for a search query triggering keywords in both the sub domains. Whereas in shopping campaigns, multiple products of the same domain can be displayed.
One can measure impressions at all levels of an AdWords account including at the account, campaign, ad group, keyword and ad. They are one of the most ubiquitous attributes in entire AdWords as they are the most basic. Also, you cannot have a click or a conversion without an impression first. It is also a good metric to analyze the potential reach of a keyword. Your position might influence the amount of clicks but impressions data helps an advertiser to approximate the potential number of searches advertisers are making for a specific keyword.
Let us know in comments below, If there is any query about impressions.