For Advertisers: Google AdWords
- Advertise to people searching on Google and our advertising network
- Reach people actively looking for information about your products and services online
- Easily control costs - pay only when people click on your ad
For Site Owners: Google AdSense
- Maximize your site’s revenue potential with contextually targeted ads
- Customize ads to complement the look and feel of your site
- Track the success of different formats and locations with online reports
So basically, AdWords is an advertising program to create more exposure for your site. AdSense is a monetization technique that you can use to help your site generate some extra money. In the end they both should help with an income, but don’t have to pay anything to place AdSense ads on your site.