Question

How does google ads know the difference between a page view conversion and a purchase conversion? im confused about how the system could know to optimize for one of these behaviors over the other.  

Answer 1

When setting up conversions there is an "Include in conversion" checkbox. That means it's included in the "conversion" column. That's the conversion metric smart bidding strategies use. If you leave it checked for both PV and purchase in that column, then it will look to optimize for either one. There is also an option at the campaign level to assign specific conversions to optimize for. This way if you have a campaign where you are looking for the PV instead of purchase, then you can have it optimize for PV. And the purchase event for others.  

Answer 2

Google Ads should be using conversions that you've set up in Google Analytics, and them imported into Google Ads. So it's kind of on you to tell Google what counts as a conversion and what doesn't. As far as optimizing for one over the other… If you're really interested in page views as a conversion action, I'd recommend that you make a separate campaign for it. (That should also let you allocate more budget to purchase conversions over page views which I'm assuming is your ultimate goal)