AdSense: for Publishers who publish advertisers for Google directly and for advertisers indirectly. Google pays you.
Got from a forum about Google:
AdWords: The Google AdWords program enables you (an advertiser) to create advertisements. Advertisements that you create through AdWords appear on relevant Google search results pages and also on sites that participate in the Google AdSense network. Google AdWords is Google's proprietary advertising platform that generates for example those text-only ads on the right hand side of Google Search results as highlighted in the print screen below.
Google AdWords is a pay-per-click advertising program where you bid on keywords and write ads. These ads then appear on Google when people type in those keywords and do searches. When someone clicks on your ad, you pay Google however much you bid on the keyword.
AdSense: The Google AdSense program enables owners of web sites (aka publishers) to display AdWords ads on their web sites. AdSense is a program that lets Google put AdWords ads directly on your web site. In other words, AdSense is Google's syndication program for its AdWords ads. Any AdWords ads that are displayed at (we say "syndicated out") at third party web sites do so via Google's AdSense program. That means that the ads seen via the AdSense program are AdWords ads posted on third party sites. The Google AdSense program delivers Google AdWords ads to individuals’ web sites, and Google then pays web publishers for the ads displayed on their sites based on user clicks on ads or on ad impressions. When someone clicks on the ad on your site, you make money (see Make money with AdSense).
Difference between AdSense and AdWords summary:
AdWords are the ads. AdWords is an advertising program to create more exposure for your site.
Users of the Google AdWords program are called advertisers.
You pay to Google.
AdWords bring your site instant traffic.
AdSense is the syndication program.
AdSense is a monetization technique that you can use to help your site generate some extra money.
Users of the AdSense program are called publishers.
Google pays to you.

