Meaning of SEO
The official term is Search Engine Optimization (SEO) and means optimizing a website for the search engines. For example, by incorporating the right keywords in the design and content of the website and by making the website easy to read for search engines, it is possible to get your site higher up in the search results.
With SEO, a difference is made between white and black hat optimization. At black hat seo, use is made of techniques that are not permitted by search engines. This includes: paid links, duplicate content, spam comments, link farms, etc. In fact, all techniques that are purely meant to mislead search engines are prohibited. You could argue that even the placing of, for example, a-b-c links (where site a links to site b, site b to site c and site c to site a) is also included.
At white hat seo you try to achieve the maximum result within the allowed possibilities of the search engines. This way you do not risk your website being banned from the search results.
One of the factors with a lot of influence is how much people write about your site. If people find your content interesting and write about it in for example a blog, then that works reinforcing. Where in the past the number of links to a particular website heavily counted is now a lot less. This does not mean that links have become unimportant, because potential customers can still discover your site via those links.