This refers to the process of preparing and structuring a web page so that it is found, read, and indexed by search engines in the most effective manner possible.
This makes your website and its content attractive, relevant and visible to search engines and web searchers (potential customers).
Why is this all so important? This makes it possible for interested individuals and companies to "find you" using the search engines. In essence, that's the reason you've created a website in the first place.
How does a website get into search engine listings? The major search engines use computer programs (commonly called robots or crawlers) to follow links from one page to another and retrieve the contents of each page.
The contents of each page are "indexed" and added to the search engine's databases.