Multi-shot will indiscriminately pick the other 2 targets. While it will not strike friendly targets, it can strike neutral targets and cause them to attack you, or targets that are CCed. It may also attack Critters, which wastes one of the shots.
Multi-Shot has always had a short cast time (even when it used to be labeled as an instant attack), and thus cannot be used while moving.
Aimed Shot versus Multi-Shot
In default, they both deal same damage to single targets and cost equal amounts of mana. If you have Aimed Shot, you should use it as default, since it does not have casting time and thus can be used while running. But when you face more than one enemy, you should pick Multi-Shot, becouse it can hit up to 3 targets (And thus deal triple damage) where Aimed Shot would hit one. Also, there are fewtalents wich favor Aimed Shot.
Patch 1.10.0 (28-Mar-2006): Multi-Shot - This ability now has its attack power normalized the same as melee instant attacks. This means that the attack power contribution from all ranged weapons will be the same, no matter what their speed. All weapons will contribute attack power as if they were 2.8 speed. Weapons slower than 2.8 speed will do slightly less damage than previously; weapons faster than 2.8 speed will do slightly more damage.
Patch 1.5.0 (2005-06-07): Special ability shots no longer add the ranged weapon speed or take into account ranged weapon haste when determining the actual cooldown. The tooltip and cooldown timers should now properly reflect the actual cooldown.