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How Google Matches the Ads to Your Site's Content
Here's how Google accomplishes the content match... "...We go beyond simple keyword matching to understand the context and content of web pages. Based on an algorithm that includes such factors as keyword analysis, word frequency, font size, and the overall link structure of the web, we know what a page is about, and can precisely match Google ads to each page." So let's say you have an information website about yoga. Once you join AdSense and paste their ad code into your site, Google's technology will determine the topic of the pages by scanning for keyword repeats, page title, etc. If successful, you will see ads that relate to yoga displayed on your web pages. Of course, the more related the ads are to your site's content, the better the click-thru.
http://www.homebasedonlinejobs.com/HowToMakeMoneyWithGoogleAdSense.html#a

How to Join AdSense
After you have created your website, click the button on the right to join. Most sites are either accepted or rejected within 24 to 48 hours, so you shouldn't have to wait too long to find out if your application has been approved. Once you've been accepted, simply copy and paste the provided HTML code into any page that you'd like to show the ads. If you've done a good job of defining the content on your web pages, the ads that show should be relevant to the content of your page...increasing the chances of click-thru by your visitors. You can either display the ads vertically along side the page like Google does or in a banner-like formation horizontally across your pages. The placement is up to you. You can even customize the colors to match your site's theme.
http://www.homebasedonlinejobs.com/HowToMakeMoneyWithGoogleAdSense.html#5