So what's the difference between Google AdWords and Google Adsense?  Sometimes people use the two interchangeably, but the two are actually totally different.

Advertisers pay to use Google AdWords, which is a form of Pay Per Click.  This means they create a series of adverts which usually show up in Google, as "Sponsored Links" when searchers use the keywords the advertiser has specified.  These adverts may also show across the internet, on various websites where the website owner has integrated Google Adsense.  To integrate Adsense, they will have signed up with Google, had their website approved, and will have then placed a series of advertising units on their website.  You may have seen these units appear, as they are denoted as "Ads by Google" to ensure visitors realise they are in fact adverts, not part of the main website.

Google Adsense can actually make the website owner money, as Google will give them a certain percentage of the click cost they receive from the advertiser.  Some website owners can actually make large sums using Adsense, if they have very busy websites.  These website owners usually have popular blogs.  Note that it's very rarely a good idea to run AdWords to get visitors into a website, and then have Adsense running on the same website.  This is because you will not make the money back, and will lose money paying it to Google for the AdWords.

In Google AdWords, it's usually a good idea for beginners to turn the display network off, as this will prevent their adverts being shown on Google Adsense units.  The reason for this is Google Adsense usually results in a far lower Click Through Rate for advertisers.  This is due to the fact a casual browser on a website is far less likely to click on an advert, than someone who had typed the keywords into a Google search specifically.