Google Adwords is a Pay Per Click advertising program provided by the Google search engine which allows you to display your own Adwords ads which is relevant to your specific niche or product that you are promoting. You choose your own highly targeted low competition keywords and every time someone searches for that keyword it will show up in the search in Google on the first page if your research was done correctly.
Google Adsense is a way for Affiliates to display Google Adwords ads on their websites and every time a visitor to the affiliate's site clicks on the ad Google pays the site owner an amount. So Google Adwords is Cost 'Per-Click , you pay Google when someone clicks on your ad which is ranked in Google and with Adsense you get paid by Google every time someone clicks on your ad which is displayed on your website. Google Adsense is therefore a way to monetize your website and increase your affiliate revenue. Once you have registered for Google Adsense Google will provide you with the necessary HTML code to copy and paste into your site.
So if you have thousands of visitors to your site every day who click on your ads, those clicks can add up very quickly and provide an income. With Google Adwords you need to work out a budget and do some research on how profitable a certain keyword is as the cost can quickly run into a couple of hundred dollars a day and if you don't make enough sales under the product you are promoting you can quickly experience a deficit.
Google does allow you to set a maximum amount that you can pay for each click which will bring your costs down a bit and also provides an Adwords Discounter which will reduce every cost- per- click to the lowest cost. The amount that Google pays out for Adsense ads is not very high unfortunately and depends on the keyword and the ad, but can range from $0,01 to $10,00 per click.
Again as mentioned previously you will need thousands of visitors to your site as only about 1 out of every 100 visitors will click on your ad. It might be a better idea to also promote other products on your site, like Clickbank which are digital products and you can earn much higher commissions per sale or you might want to look at developing your own product and sell it.
In any case to succeed at your campaigns you need the correct training and guidance on how to do the proper keyword research and you might also want to look at other traffic generation methods like Article marketing which is free or Email marketing, Social media or Forum marketing.