SEO stands for search engine optimization and it is the science and art of how to write the content for your website in such a way, that search engines can find it and will rank your page, so that your website shows up when people do 'keyword' searches on Google, Bing or Yahoo or Ixquick, to name a few search engines.
Search engines use web spiders ( also called internet bots or web crawlers ) to crawl all sites of the internet and come back with information about those sites. The information is then used for the index ( think of a phone directory ) of the search engine.
The index contains information on what your site is about, if other sites link to your site and the ranking ( relative importance) of the sites linking to your site and more important, the ranking of your site. The sites with the highest page ranks show up on the first pages of the search results when peaople do a search.
Key words or key phrases are paramount to your site showing up in search results. These are the words or phrases people type in when they do a search on Google , Ixquick, etc. Your site needs to contain these keywords relevant to your business or organization. The important thing here is to make your keys not too generic, like: "Sail boats", but somewhat more specific, like: "affordable sailboats in Laguna beach".
A 'Tag' is the technical name of an element on a web page. "Title" is a very important element that spiders consider. You can see the titles of sites on the folder headers, when you have multiple sites open in your browser. The title should contain the most important key words and cannot be longer than 65 characters.
The description element is a very important to place your key phrases. The description shows up in the search results a a short summary of the page. Try it with any search engine. The description cannot be longer than 155 characters including spaces and should contain your key word phrases, but should also be written 'people-friendly' as they decide to click on your page or another, based on the description they see.
Some companies try to game the system by tricking the search engines. Tricks that have been used in the past are hiding thousands of keywords on the site (invisible to the reader, but visible to bots ) and buying links. This works only on the short term though. In 2010 alone, the Google search engine implemented over 500 algorithm updates to prevent gaming the system and even penalize those sites who do.
For sustainable results, White hat SEO is advised. This means writing authentic content, readable not only for bots, but especially for people. So... keep your site visually interesting, write snappy, not too long paragraph headers, make your paragraps not too long. Know your potential readers and write for them. There is a big difference if your targeted readers are teenagers or say, retired professors.