SEO is just the process of making websites get higher up in Google. Google wants you to do certain things when you make a website. If you do these things, Google will put you higher up. simple eh?
Search Engine Optimisation or SEO, just means optimising your website (making it work better) for Google.
Technical explanation: Search engine optimsation is the creation of websites to conform to HTML CSS and W3C guides to obtain better rankings in Search engines, either Google, Yahoo, MSN or Altavista. Search engine optimisation is divided up into “white hat” or “black hat” SEO. White hat SEO is considered to be ethical responsible optimisation, using well written content, user friendly navigation and clear directory architecture to obtain better SERPs (Search Engine Results Pages). Black hat SEO is using unethical techniques to obtain better SERPS; the manipulation of code, cloaking techniques and things like IP redirects. There is a massive grey area between white hat and black hat SEO with most SEOs adopting a combination of the two.
It is thought eventually, search engines will become so fluent at detecting black hat techniques, that the black hat SEO will eventually fall by the way side. An emphasis is being placed on mixed media content to place websites higher in the SERPs. In the past months Google have already updated their algorythm to discount things like spam pages and appear to have introduced a stricter filters for keywords. However for coders using cut down spam pages with php word echos to mix up paragraphs, Google still treats each page like an individual object and SERPs can still be manipulated.