Optimization, in this case, is making your site easier to find by search engines. Optimized sites are ones that are at the top of all the search lists when you try to find its particular topic. A good site is one for a soccer shop that is found when you search keywords like "soccer," "cleats," or "jersey" but not words like "tennis" and "marmot."
Does it really matter that my site ranks the highest on Yahoo! or Google? Does it really matter that people I don't know come and see my sight? I mean, it's there loss if they don't visit, right? To answer those questions simply, "Yes." But, for more details, I'll explain. For a business site ranking highest is extremely important for online sales and to beat competitors. In order to sell anything in e-commerce, customers need to find the site first. But, you don't have an e-commerce site, you are just John Doe CS major with a blog about some trip you took this summer. Why would you want anyone to see that? The reason is because sometimes people want to see it, and you, Johnny boy, can make some bank off of that. If your site is on Tripod or Geocities, anytime someone clicks on a sponsored link and buys something, you make money. If people decide to read about "The Ultimate Summer of John Doe," then you can put more sponsored links in, and start making money. Now some sites are meant to be private journals only your friends, or just yourself, can reach from anywhere, those you may never want to be found. This guide will help you too.