Publishers should never use tricks or deceptive practices in order to trigger accidental clicks on ads. Make sure that your ads are well-placed on your site, away from interactive elements, do not mimic the surrounding content and are not placed under misleading headings. Maintain adequate space between the ads and the page controls. For example, on site with games, try to avoid placing ads too close to the game controls. We generally recommend a minimum distance of 150 pixels between the flash player and the ad.Please don't place content ads on interstitial pages, gaming sites, or sites with streaming videos. If you'd like to earn from your video-streaming or game site by overlaying, in-stream, or interstitial placements, please check out AdSense for videos and AdSense for games.
Google has even prepared pages for best placement practice and those not accepted:
https://www.google.com/adsense/support/bin/answer.py?answer=132575
https://www.google.com/adsense/support/bin/answer.py?answer=136901
https://www.google.com/adsense/support/bin/answer.py?answer=136882
Yes , of course what you are saying is absolutely right.if youre asking about "watch online" illegal content, its a big nono with adsense