Hi BHPV,
What everyone has said on this thread so far is quite correct, but what I have noticed is missing is a simple explanation of what SEO is and the difference effective SEO can make to your site, which I figure is what you were after in the first place.
SEO or Search Engine Optimisation is simply the technical, design and textual process of making your website more friendly to search engine spiders (bots, crawlers, etc, the programs search engines send out into the web to analyse your website). This is done by creating your website within current development parameters (W3C) and making it as easy as possible for search engine spiders to navigate around and identify it as relevant for terms (phrases and words) you think people may put into search engines to find you with. (this is a massive subject which goes into the web programming languages that should and should not be used, the structure of the site to ensure that all pages of the site are accessible and are no more than three clicks away from the Home or landing Page, and copywriting to promote the terms you feel your potential customers might use to find you when searching on search engines).
So when someone talks to you about SEO they are talking about what you have done to ensure that search engines can quickly and effectively analyse your website and through your promotion of particular keywords/phrases to register it's relevance for those terms.
The results of effective SEO is that you will be listed in the major search engines (Google, Yahoo!, MSN, etc), and the better the job you do in optimising your website the higher up the listings you come until you're on the much coveted first page. Of course the higher up in the listing you come the more likely it is that you potential clients will find you, and therefore the more money your business will make.
The best thing about SEO is that when you have it up and running it costs you nothing. You do not pay for a "natural" listing in Google, so if you are able to maintain or improve your list positioning you can gain as much or more effective promotion than any paid advertisement or PR campaign, which is why SEO has become so important in recent years.
Hope this helps.