A gadget is an XML file that wraps existing web content or applications. Gadgets are being used more and more frequently to showcase “cool” content from one website on another. Google plans to use this technology to offer its traditional text link advertising, display advertising, and interactive gadgets to its huge network of advertisers via AdSense.
AdSense publishers will be able to select the a format that best suits their need, and the Google AdWords system will deliver the most relevant / profitable ad content. According to Niall Kennedy’s weblog, the advertising content can behave like a miniature application, integrating tabs, updating its content on-the-fly using web feeds and other data protocols, and creating small interactive experiences across the web.
The image below shows a sample gadget, a flight status tracker, that webmasters can easily integrate into their own sites: