Although image ads can and are served through AdSense, they are predominately known for their text based, contextual ads. This means that they attempt to display ads relevant to the content on the pages in which they are placed. So, for instance, on phpBBHacks.com - you might see ads for phpBB related services or for web templates (since the word template is on our site a lot). On a site about sports, you will generally get sports related ads. This is a good thing as it (theoretically) makes it more likely that your visitors will be interested in the ads.

The great thing about AdSense is it's flexibility. You can place it at the top of the page, to the left, the right, at the bottom, in the middle, wherever. They have a vast array of ad sizes available, as well. They also have a link units format, which you can see at the top of this page (look to the top, below the network bar and above any site content - the area next to the black "Ads by Google" text). You can customize the colors as we have on our site to make the ads blend in.

AdSense allows you to have as many as 3 normal advertisements and 1 link unit (4 total AdSense ads) on any given page. They also offer a very powerful user area where you can view up to the minute stats, block sites from being advertised on your site and more. You can find AdSense ads throughout our site and forums. Here is an example of one:
If you join the program, make sure that you read the program policies so that you can ensure your acceptance as well as maintain your membership in the program.

Note: the link above is an affiliate link, but it in no way affects your earnings. We use this program ourselves. If we stop using them, this page will change.
Enjoy!