How do websites and blogs exactly make money?

There are LOTS of ways you can monetize and make money with your blog/website. It depends on your current skill sets, your goals and how much time you want to put into growing a website…

Let me give you some examples:

1. Skills - Say you have software developing skills, then you can build a website showcasing that skills and offering your services to the people. You can also make your own product, showcase it in your website to sell it. This kinds of site can exist with just few pages only!
2. Goals - Now many people won’t like the idea of dealing with customers everyday (it’s true for our example above). Many people want to have a website for the purposes of generating passive income in which you’ll likely want to monetize your website with ads such as google adsense or other ad networks if you want to achieve this. Also, selling is required with such service kind of site while you don’t need to convince people to buy from you when you have an adsense site (you’ll get paid when people just click an ad displayed on your site).
3. Time - You must understand that the time you’ll spend on growing a website based on your prefered style of monetization can vary a lot. On our 1st example above, again this site can exsit with just few pages in it (home,about, contact,services,etc) while an Adsense website (example #2) requires production of lots of content. The way you’ll be getting traffic and HOW MUCH traffic you need can greatly vary too! A service website can earn $10,000 a month with let’s say 1k visitors a month while an Adsense website requires hundreds of thousands or even millions of visitors a month to generate that kind of income.

Understand that examples presented here are not limited to what you can do and how you can monetize a website. There are other kinds of monetization such as affiliate marketing to name one.

That being said let me answer your questions one by one:

Who's going to pay me when people visit my website? How many people should visit my website until I get paid? How do I know how money people are visiting my website?

I have answered this on my example above. The amount of traffic you need entirely depends on what kind of monetization your website offers.

If you offer services then your customers/clients will pay you. If it’s an adsense site, then obviously Google will send you the check :)

You’ll know how many people are visiting your site with Google Analytics.

Who's going to choose my website to put ads on? Private companies you mean? So to put an ad in my website it should become a nationally known website with thousands or millions of viewers for companies to want to be in it?

Again, it depends. On adsense site, you’ll put Google ad code on your site. Of course, you can sell ad space to other private companies when your website attracts lots of traffic and their ad is related to what your website is all about.

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When you have a service site, quality matters than quantity. If private companies found out that your site attracts high quality traffic then they most likely want their ad on your site!

What other ways are there? How do they exactly work or are executed and generate money?

There are lots of ways on how to do online business! I’ve come up with THREE sustainable online business models that are proven and time tested. Feel free to visit my blog to learn about that here: The 3 Passive Money-Getting Strategies Online.