adwords = to advertise for business owners feel free to see the owner http://adwords.google.com/ adsense = for publsihers same - for details see owner https://www.google.com/adsense/
adsense is where you can put someone adv. in your website and earn money when someone come you website and click on other adv. where adword is google ppc where you can buy position in google.com first page at adv. sponser adv. portion.
Adsense - Offers a contextual advertising solution to web publishers Delivers text-based Google AdWords ads that are relevant to site content pages. Adwords - AdWords offers pay-per-click (PPC) advertising, and site-targeted advertising for both text and banner ads.
If you want to display adverts on your website, you can do so with Adsense, which is Google's program to do this. Adwords allows you to advertise either on their Search Engine (and other engines using their search results) or the Content Network, which is called... Adsense. So you advertise on Adsense using the Content Network option on Adwords.
In simple language, adword is for the adverstiser who want to give out their ads to see by prospectives and click on it and come to their website. They pay for per click charges. While Adsense is for the publisher who want to publish these ads in their site to earn some persentage on it. In between, always a mediator would be there like here google. Do you wnat to know anything more, tell me, I will try to help you out.
Boggles the mind how people can ask these questions. Did you go read the Google pages on these 2 programs? It's all stated pretty clearly. Adsense page: Adwords page: Top of the page, big bold letters.