AdSense is a ‘contextual’ advertising program where publishers simply add a piece of code to their blogs that helps Google analyze what your page is about so they can serve ads on that topic. This increases the chances of your readers clicking the ad which increases the chances that you’ll earn something from them.

AdSense also provide a variety of other income streams to bloggers including a site search tool (you make money by people searching your site) and referral tools (where you can make money by recommending Google products).