If you think that you are enough smart to earn by clicking on your ads or else you will pay some one to click on your ads or change IP etc etc. It will not work to know more keep reading.
IP: Google keeps eye on every Internet Protocol (IP) from which ad click is generated. Multiple clicks from same IP are considered as fraud or invalid.
Browser: In dial-up internet connection every time your connect after a period of time your IP chages so google along with IP address also keep watch on your browser detail whenever any click is generated google finds if they have got more clicks from same browser even to different website still google consider it as fraud clicks. For checking your current browser detail CLICK HERE
Location: If very high number of clicks are generated from a particluar small area then all clicks are considered as fraud clicks.
Search engine ranking and traffic: Google see that if your website is receiving high CTR and your website is not listed in search engine or not getting enough traffic from search engine than google will reduce your eCPM or not pay you considering clicks as fraud clicks.
Cookies: Google will read cookies of your browser so even if your restart your computer or internet connection it will easily identify.
Hardware: Your Media Access Control (MAC) address of the LAN card is known by Google and these details are impossible to change. So it make easy for google to trace fraud clicks.
Requests: Google also inspect your web design. If you have requested to visitors for clicking your ads by a written note such as "Click Here" "Support us by clicking our ads" or any other then google will ban you.
Google services: For example if you go to some other computer or cyber cafe and you are not logged into your adsense but in Gmail or Orkut or Blogger or Doc or Youtube or any one google services and you clicked on adsense ads. Still google will detect fraud clicks because it keep eye on fraud clicks through its other services also.