I think you are taking about Latent Semantic Indexing.. read more about it here:http://en.wikipedia.org/wiki/Latent_semantic_indexing and here: http://www.google.com/search?hl=&q=...avclient-ff&rlz=1B3GGLL_enPH377US377&ie=UTF-8
Latent Semantic Indexing - search engines don't - can't - use it. What Google does use it cruder forms of semantic matching and has taken out various patents over the years. What it means for SEO is that you should use your keywords in the context that you would expect to find them, alongside related words and synonyms. i.e. - write well and naturally. If this is a new idea to you, you've been doing it wrong all along - you should have been doing this for visitors, anyway.
This post is useful specific for this topic - The effect of latent semantic indexing LSI on your website search engine rankings.