Adwords is the name of Google's PPC advertising program. Advertisers create ads and choose keywords to trigger those ads when people search for them on the Google search engine. Those ads are shown on Google as the sponsored links above and to the right of the SERPs. Advertisers can also choose to display those ads on sites that publish them. Adsense is the program where you, as a publisher, can display those ads on your site. It's a simple piece of code which handles the display of those ads. When visitors click on them, you get a portion of the advertising revenue generated.