AdWords is a tool that you use to create ads on google. AdWords is a key factor in Google's stock being worth so much. It's not just AdWords that does this though, it's the whole search engine. AdWords focuses on tracking ROI and it is a very successful way of getting your ads viewed.
The purpose of an ad is to get people to "click through" your ad when they are searching on Google. On google you pay for your advertisement based on how many people actually click on your ad. This is called "cost per click." Many people will see the ad, but only the ones that actually click on the advertisement will count in the CPC.
The biggest strength of Google ads is you can track exactly what you get out of it. This means you know exactly how well your ads are performing. Online advertising is significantly more track able than every other form of advertising, which is what makes it so successful.
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