In iBooks, tap the Collection menu at the top center of the Library screen. This will include the default collections of All (Books), Books, Audiobooks, and PDF's, along with any other collections you've created. At the bottom of the list view there is a switch labeled Hide iCloud Books. Turn this on.
If the switch is off, then every book you've ever purchased from iBooks will show up in the All Books list. Those that are not downloaded on the iPad will have a cloud icon on the cover (or next to the list) to let you know you can download them again, if you want.
This is similar to how Show All Purchases works in the settings for Music and Videos; except the setting is in the iBooks app instead of in the Settings app. I've no idea why Apple did it differently for iBooks.