I'm defining this autoscaler with kubernetes and GCE and I'm wondering what exactly should I specify for targetCPUUtilizationPercentage. That target points to what exactly? Is it the total CPU in my cluster? When the pods referenced in this autoscaler consume more than targetCPUUtilizationPercentage what happens?
The CPU utilization is the average CPU usage of a all pods in a deployment across the last minute divided by the requested CPU of this deployment. If the mean of the pods' CPU utilization is higher than the target you defined, the your replicas will be adjusted.
You can read more about this topic here.
This is average cpu utilisation of all the pods, so if you have given CPU as 200 and targetCPUUtilizationPercentage as 80%, then at 160 value of threshold, it will scale out the pod. It will create a new repliace.