Let's first start out with what Google AdSense is...
Google AdSense is Google's way of giving blog authors the opportunity to make money on their blog. Essentially, you put advertisements up on your blog and when people click on the advertisement, you get a small percentage of the money Google made from that one click.
There are many types of similar services out there if you want to make advertising money but AdSense is definitely one of the larger ones. It's also one of the most user-friendly ones because Google does most of the work for you. You decide which spaces you want to allot to advertising and then Google will scan the content of your site to place applicable ads. So if you have a car blog, you will probably see a lot of car-related ads.
What's the other shoe, right?
The most obvious thing is that you have to have advertisements on your blog. You can choose how many and where these advertisements are placed. However, if you totally coat your blog with "flashing neon" it might be a turn off for readers.
But does it generate money? Yes and no. I have AdSense on most of my blogs and I get the occasional click here and there which amounts to a few cents to a couple of dollars a month. But all of my blogs tend to be very niche. So compared to, say, a gossip blog that follows Snooki's latest scandals, I'm going to have much lower traffic overall.
At the risk of sounding like a Debbie Downer, I feel like the age where you could make hundreds of thousands of dollars from blog ads has come and gone. The ads have actually become better and more targeted. But that just can't keep up with the fact that most of the USA's population has become internet savvy. Going back to my go-to reality check: when was the last time I ever clicked on an ad to find something?