Google uses a number of methods to detect paid links, including algorithmic techniques. We also welcome information from our users. If you know of a site that buys or sells links, please tell us by filling out the fields below.
This has ZERO to do with AdWords and everything to do with blackhat seo.
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I agree with the 7host. Tittle of the thread and its content has no connection in between. Although, the thread itself is pretty interesting. The form seems helpful to inform Google about those websites who buy or sell do-follow paid links to rank higher in search engine, however, this also indicates Google's tendecy to enforce webmasters to go for adwords.
Google has already created a form for webmasters to report websites that are directly selling links to the companies and interested buyers and since it is against quality standards and norms of Google team, so the form is serving to let Google know of the violators otherwise hundreds of thousands of websites are monetized through AdWords and doing with no problems.
Wrong title as this was already stated above. It has nothing to do with Adwords.
If everybody would use this form to file a complaint against the sites stuffed with junk links I would say it is OK. I do not know how much harm would cause if it is not used with responability.