When making a game how many ads is a fair amount? Is it written someplace, or just up to the Author to decide?

Most web games in the past used to have one in the preloader and not much else. Some games occasionally put an ad or two in the menu screen.

I would say one or two ads is a fair amount, anything else is potentially stretching it. Of course, the golden rule---that it shouldn't be intrusive---must be followed, and you can get away with more if they're tasteful and not intrusive either. However, given how poor ad payouts are these days for games, I think you'd probably get far more mileage from just asking people to donate directly, because even though almost nobody does that, it's still probably going to be more than whatever pennies the ad companies toss your way---especially if your game isn't a blockbuster hit (which it will not, no matter how much people want to believe, since 0.0001% is almost impossible to achieve.)

Ads should be optional. As in, some sort of small boost or reward for clicking the "watch ad" button. It's at once considerate - allowing the player to opt for an ad free expereience - and practical - everybody likes free stuff, and most people will gladly waste 30 seconds of their life for some gold, or a continue. So your ad viewership will be high.