Adsense is a content matching system - you can place Adsense ads on your blog or other website, and Google will pay you for the clicks. Adwords is Google's Cost per Click service - Here you can take advantage of Google Adsense by creating ads to target keywords on their content based network or you can create ads that appear on the right hand side of the Google SERP.
Adsense is where google pays u for ad clicks and Adwords is u pay to Google for traffic they provide to your site.