As a beta user of "AdSense for Games," you can display video ads, image ads, or text ads within your online games to earn revenue. "You'll be able to show these ads in placements you define, such as interstitial frames before a game, after a level change, or when a game is over. AdWords team will sell your in-game ad placements directly to top brand advertisers, and you'll also see contextually targeted text and image ads based on content and demographic info. In addition, you'll be able to control ads you see on your pages using filtering options," explained Google.
Here's a quick video to give you a better idea of what games are part of Google network and how advertisers can use this medium to reach their target audience:
And here's another, less flashy video, to show actual game play and how an ad could appear within the game:
At this time, eligible publishers must have a minimum of 500,000 game plays per day and have 80% of their traffic from the U.S. or U.K. If you're interested in becoming a AdSense for games beta publisher, submit an application.
More Info: Games Site