Understanding Google AdSense

Google AdSense allows webmasters to dynamically serve content relevant
advertisements on web pages. If the visitor clicks one of the AdSense ads
served to the website, the website owner is credited for the referral. Google's
AdSense program essentially allows approved websites to dynamically serve
Google's pay-per-click AdWord results.
Website maintenance related to AdSense is very easy and requires very little
effort. Webmasters need only to insert a Google generated java script into the
web page or website template. Google's spider parses the AdServing website
and serves ads that relate to the website's content. Google uses a combination
of keyword matching and context analysis to determine what ads should be
served. The java script calls the ad from Google and will ensure that ads are
served each time a visitor goes to the web page.
Early on Google implemented a filtering system that allowed webmasters to
prevent a specific domain's ads from being served on any websites in their
account. Ad blocking meant that webmasters could prevent their competitor's
ads from being dynamically served on their websites.