Search Engine Optimisation (Commonly abbreviated to SEO), is the process of optimising a website (or even another web property like Youtube videos, social media pages etc.) so that it gains visibility and therefore traffic from the search engines.
Generally, the traffic we are talking about in terms of SEO is from the free search listings – also known as organic or natural listings. These are the ones in the diagram inside the blue box (click the image to enlarge it)
This image is from Google, but the situation is s
imilar in other search engines. There can also be other elements on the page like maps and other types of listings and information.
SEO enhances your visibility in the organic listings in the blue box. The other areas (in the red boxes) are paid listings – in Google’s case through Adwords.
How does SEO work?
SEO consultants and companies companies use a range of strategies and techniques to firstly ensure your site has the required content and elements needed to be relevant (and seen by the search engines), and then to ensure that your site is given the priority in the search listings that it deserves – or often times more than it deserves.
See more information on how your site is ranked here (How SEO Works) – this will give you a good idea about what actually affects your ranking in the search engines.
Also, here is a good video by Google engineer Matt Cutts about how Google actually works in ranking websites:
More Explanations of SEO:
Search Engine Land is an authority in the area of SEO:
Wikipedia also has some good info on the topic, particularly historic information: