Adsense expands the advertising universe for advertisers
Yes, but I think it does more than that as well. Through Adsense, advertisers are able to reach beyond the SERPs into a diverse world of highly targeted environments (our websites). I'm not saying the SERPs don't provide good targeting for advertisers (because they do), just that webmasters tailor the user experience in ways Google can't. In many cases, we are pre-selling for the advertiser in the sense that we're surrounding the ads with related content (or, in other words, producing an environment to support a certain ad subject) that keeps the viewer's attention long enough for the ad to be effective. We are a targeting mechanism for the system and we help retain people's attention and focus it. In this sense, I think Adsense is quite valuable to Google and us little folks do serve a key purpose in that system.
Channel targeting is a good example of one way G is working to facilitate relationships between the advertiser and the publisher...(even if it is a bit weighted in the advertiser's favor). This shows that Google understands the value of publishers quite well and that Adsense is a key component in their strategy.