CAPTCHAs that give you two words to type out are actually used to digitise books and newspapers from before the digital age. The first word is the one used to determine whether your human or not and the second is one from an old book or something.
reCAPTCHA improves the process of digitizing books by sending words that cannot be read by computers to the Web in the form of CAPTCHAs for humans to decipher. More specifically, each word that cannot be read correctly by OCR(Optical Character Recognition) is placed on an image and used as a CAPTCHA. This is possible because most OCR programs alert you when a word cannot be read correctly.
But if a computer can't read such a CAPTCHA, how does the system know the correct answer to the puzzle? Here's how: Each new word that cannot be read correctly by OCR is given to a user in conjunction with another word for which the answer is already known. The user is then asked to read both words. If they solve the one for which the answer is known, the system assumes their answer is correct for the new one. The system then gives the new image to a number of other people to determine, with higher confidence, whether the original answer was correct.
About 200 million CAPTCHAs are solved by humans around the world every day. In aggregate these little puzzles consume more than 150,000 hours of work each day.