Well that's where they go when you archive your books. When you delete a book from your iPad, you can always download it again because Amazon keeps track of your purchases. This also provides the means for reading your stuff on different devices (I think the maximum number is 5). Once you buy a book, you can access your account and download your purchases on an actual Kindle reader, your computer, your iPhone, iPod Touch and now your iPad.
The other really nice feature if you read books on more than one device is Whisper Sync. Let's say I start reading a book on my iPad. As long as I am connected, Amazon will remember where I left off. Now when I want to read the same book on my PC, when I open that book, Whisper Sync will take me to the page where I left off when I was reading it on my iPad! And when I close that, I can go somewhere with my iPhone and it works exactly the same way where it picks up where I left off.
And just to be fair, the other major readers have a similar feature where you can sync among several different devices as long as the are tied to the same account.