O.K so you register with adsense, they approve your content, then you go and put your number on lots of new sites. How do they tell? Can they track...
The adsense scripts will be picking up all the standard hit counter information and possibly more. Through their IP tracking they'll be mapping all the sites you visit and learning about your surfing behaviour. They won't be using it to manage you personally but to understand how best to serve up ads to all users. Therefore if you clickbomb a site they'll know if you are trying to hurt a competitor or benefit yourself and can take appropriate action.
O.K thanks, so how can Google tell if your against TOS? I mean if say you put your ads on a site that was, how do they find out? Apart from someone telling them, or is that how?
It all depends on which TOS clause you break. Yes, reports will be needed but if I was running the show I'd also look at a CTR that is too high or changes that may indicate that the site has changed significantly. Then they have a bot that reads all those pages and it'll have programmed sensitivity to certain things and your site will be flagged. I'd have new accounts subject to more stringent checks than older sites. But I'm not running the show so it's just my guess work, knowing what information they are able to gather... and thinking about how I'd use it. If they choose to, given the caliber of the people they employ, they can do all this and more. The real question is, I guess, just how much they want to do...
Think about it, they are a search engine, if they index your site (which they pretty much have to if you are running adsense) then they know your content. True they may not act upon it until reported, or may delay acting upon it for a while, like waiting for the site to get close to payout as has been reported on here.
adsense algo is a big secret secret but if you want to track your clicks, adlogger may be useful for you