It works for the visitors, because the model is very transparent. You don't see a huge graphic banner which tries to lure you into buying something. You just see a few words. And if you like what you see you can just click it. It works because visitors don't have that feeling of someone trying to lure them into spending money. Ironically, however, they're wrong.
It works for the AdWords advertisers because their ads go everywhere. Not only will they find themselves listed in Google's search which gets gazillions of hits per day, up front without working as much for SEO and waiting so much.
Their ads can reach any website that deals with anything similar to what they're trying to sell. Now you must realize they could never pull of such great advertising by themselves. And that brings us to the thing that makes Google's AdSense a publisher's best friend.
It comes from the fact that the ads are contextual, that they somehow related to the keywords you deal with on your page. Because people or on your site, which deals with a certain topic, you already know they're interested in that topic.
But, hey, wait a minute, Google knows some companies which want to sell your visitors something related to their topic. Google wants your visitors, you want Google's advertisers and the visitors just want to buy stuff. And that is the essence of what makes AdSense a great deal for everybody.
This is by far the most profitable hook-up deal you're ever going to see anywhere on the Internet.
So you have to appreciate Google for realizing a killer deal. You have to appreciate how well thought out, yet simple this scheme really is. Sure, in practice it has a few quirks but those are minor and, up to this point everyone seems to be enjoying Google's AdSense.
You need to have optimized niche website templates for best results. You may find the best adsense templates and blog templates at www.AdsenseTemplates.com (http://www.adsensetemplates.com). They are offering 100 fresh new templates every month.