Audiences are a type of filter and work according to that model. If you don't
choose an audience  the default is to show it to everyone.

Okay. I agree with that. But even when I create an Audience Group and assign it.
Its just displaying for every one.

Say example : I have "IT users" and "HR users" as Audience. I created  survey
page with 2 items.

IT survey(selected Audience : IT users)
HR survey(selected Audience : HR users)

My intension is when a HR user  come to the survey  page he would see ONLY HR
survey.

I don't know what I am missing in this....

There are 3 parts to using audiences

1) Create the audience
2) Target the content
3) Setup the webpart used to view the content to use the audiences

Sounds like you are missing #3.

Reagarding the step 3. As far as i know I am not using any web part for the
survey. I am using the built-in option.

like manage content > create > survey

I guess i am missing something please let me know more about "Setup the webpart
used to view the content to use the audiences"

do one thing , click on edit page where your survey  is being displayed on, then
click on modify shared webpart and from there select the survey web part you
made and on the properties pane which it opens up in side on the end of the
properties pane page there is an option to select audience  so do that , and then
the survey will only be available to the audience you select

Excellent - That works great.

So we have two places where we can target Audience.

1. Edit page > Click on the Listing > Edit > Display Tab > Audience
2. Edit page > Modify Shared page> Modify shared Web Part > Target Audience

What is the diffrence between these two? the 2nd one is working for me not the
1st one.

These 2 are not equivalent - your #1 is my #2 and your #2 is my #3. Your #1 is
targetting the content and your #2 is enabling the "view" webpart to use the
targetted content. Both are required.

Remember audiences  are a type of filter, not security. You can think of it this
way - in my steps you first create the "attribute" (the audience), then set it's
value (targetting the content), then create a filter to display  items with a
particular value (setting the audience  in the web part).

I created  10 news listings under "Home > News " section.

when I setup the audience  in the web part by doing the following

Edit page > Modify Shared page> Modify shared Web Part > TargetAudience

All the 10 news listings are targeting to that perticular Audience Group.

Is there a way that I can target 5 news listings to a Audience group and other 5
to a different audience group?

You're still missing my point I think - you're trying to skip a step. The
process you are describing is targeting the web part to an audience  - to do what
you want you need to instead target the content (the Listings themselves) to the
audiences. Then in the web part use "Group By" with a value of Audience instead
of Target Audience in the web part settings.

you said it yourself, audience  is not real security, it is just that if an item
is not targeted  to audience then it is available to all, by default