There are several ways of making money with your website. The main two that I use, and will talk about are Google Adsense and Affiliate programs.
Google Adsense
This is my preferred way of making money from my sites as it doesn’t involve any type of selling whatsoever.
All you do is to place a bit of code supplied by Google on your web pages and Google places the relevant ads on your page.
The ads are like ads you see in traditional newspapers and are clearly marked as ads.
Google Adsense is ideally suited for content based sites.
Affiliate Programs
Affililiate programs are free to join and again involve you placing a bit of code or a banner on your page(s).
However they usually involve you making a recommendation either directly or indirectly. Hence you should be familiar with the product.
I always try to own and use the product before I make a recommendation but in some cases I will indirectly promote a product that I don’t own or use.
For example I use Get Response as my autoresponder, and I promote it as an affiliate.
However I will point out alternatives, and if they have an affiliate program I will usually join it and use my affiliate link when linking to those products.
Affiliate programs are especially suited for sites that review products or are product oriented.
Using Both
Don’t think that it a one or the other choice. I use both and almost every site does. The only question is the mix and that will vary from page to page. For content pages I use Google Adsense and for product review type pages I use affiliate programs.