If you opt to use 2-step verification, when you log into your Google AdWords account, you’ll enter a code obtained through your phone in addition to your usual password when you sign in.
If your Google Account is associated with other Google products, such as the AdWords API or AdWords Editor, you may need to enter an application-specific password instead of your regular account password when you sign in to these specific services. This is because certain applications aren’t designed to prompt for a code in addition to a password.
To create an application-specific password, click on "Authorizing applications & sites" on your Account Settings page.
Under the application-specific passwords section, provide a name for the application you wish to generate a password for, for example “AdWords Editor - Desktop”.
Here’s what the generated password looks like:
To learn more about application-specific passwords, visit the Google Accounts Help Center and AdWords Editor Help Center. Please visit the Official Google Blog for the complete announcement.