Google Adsense allows people who own a website to make money by placing ads from the Google network on their website. It’s really very simple. First thing to do is make a website, second is to apply for an Adsense account. Once you are approved, you make your ads within Adsense and then past the java code on your page source, and then the ads come up when visitors come to your site. If they click on the ad you get paid! The trick here is traffic. Create a website that generates traffic and you can make money off of it with Adsense.
Adsense fits in very nicely with Google Adwords. Adwords is the platform that allows advertisers to buy ads to be placed on websites. If someone wants to place an add contextually on a sites that are about hockey, and Google knows your website is about hockey (and you are a memeber of Adsense) then there is a chance that Google will place that ad on your website when a visitor comes to your site. The Adsense network allows Google to significantly expand their reach into small channels. More coming soon on Google Adwords.