IP Address – Firstly Google detect the IP address from which it received the click.
Location – Google has powerful tools to detect Geological Locations from which click has been received.
Click Through Rate – Normally, Click through rate should not exceeds above 10%, otherwise Google will flag the account as fraud. Normal Click through rate is 0.5% – 10%.
Cookies – Google sets cookies on your computer, that can trace even you restart your connection.
Search Engine Ranking – Google also detects your website or blog search engine ranking do detect consistently traffic.
Advertisers Conversion Rate – Ad click is one thing. But does it bring value to the advertisers? If none of the clicks on your site translate to conversion to the advertiser, you are in trouble. First the Smart-Pricing hits, then your AdSense account disabled.
Webpage design – Google also detect the design of your website or blog, to know how you are getting clicks.
Other Google Services – As you know Google also provide series of services like Google Earth, Google Calendar, Google Toolbar, Google Search, Blogger, Google Desktop. These services can also provide necessary information about you to Google.