I hear alot about using link bait to get people to click on links, but is that unethical? Is that the same as having sites set up just so people can click on them and nothing else, such as like Googles click fraud?
Link bait isn't about getting people to click on links on your site. What you're talking about is a MFA (made for adsense) site where the site is set up with no where to click except on an advertisement. Link bait is when you create something (an article, software, etc.) that gets enough buzz that other people link to your site.
You got it wrong. Linkbait is about getting people to link to your site In my opinion it's not unethical it's just you being smart.
Link baiting is possibly the most ethical way of link building. You're creating something of interest to others, therefore they naturally will link to it.
You just got yourself confused. Link baiting is perhaps the most natural and effective way to work on building links so that people actually want to link to your sites on the basis of having popularity and good web contents. The one which you mention about click frauds and confusing people to click on your links are actually MFA sites.