Campaigns is where you start your adwords. This is like the top of the funnel. This could be all of the ads you are going to run to one website, or you can have multiple campaigns targeting multiple websites, or different types of campaigns (if you had a shop) and each campaign is for each category.
Settings – Inside here is where you choose which network you want (search or display), your location you want to target, languages, your budget, bid strategy, ad rotations, scheduleing and other settings. Setting up this area is very important to make sure your ads run correctly.
Adgroups are used to set up a tightly knit set of keywords, from 1-10 keywords that are related very closely. This allows the ads that you write to be very specific and relevant to the keywords you are targeting. Using this strategy shows Google your ads are very relevant to your keywords and allows your Quality Score to be higher. (very important)
Ads are extremely important as these are the words people see in your ads. When they type in a keyword to search inside Google, your Ad is designed to INFLUENCE them to click on your ad over all the other ads that appear. Your ad's must be relelvent, target those keywords people type in and must be prominent enough to grab the attention of the searcher. Utilising Ad Extensions help's your ad become more prominent also.