What Is The Difference Between AdWords and Keywords?

A question that I've seen asked a few times online (and heard asked in person) is what is the difference between Google AdWords and Keywords?

Long story short, here's the answer:

Keywords are the words/phrases that a user searches on a search engine (like Google) to find what they are looking for. For example, I want to find a 24hr gym in Christchurch, New Zealand. I might go on Google and search '24hr gym christchurch New Zealand'.

Google AdWords is a platform that allows you to advertise to people looking for a particular keyword (or set of keywords) on Google. So as the gym owner, you might advertise on AdWords - which is now called Google Ads - for people searching for '24hr gym Christchurch New Zealand'.

Keywords also refers to the words/phrases you optimise your website for (which you've generally decided on based on what your audience search for).