promoting either a third party product or web site from your web site and being given a financial incentive for doing so.

You, the host site, follow through the links on affiliate sites and register your interest with them, some sites will accept you automatically, others will want to validate your site.  When you are accepted into their affiliate program, place their banners and links within your site.

• Usually a few percent of the revenue (sales) generated by the customer who originated from your site.
• Sometimes a small financial reward for each viewer (click through) originating from your site.

Not that we can see, but some advertisers do pay better rates for click through or commission for the same products than other advertisers.