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Read the google SEO report card..... it has everything you need to know about on site optimization. http://googlewebmastercentral.blogspot.com/2010/03/googles-seo-report-card.html
There are many factors that contribute to showing up well in search engine results. Some of the most important items are found on the web site themselves and are called “On-Page Optimization.â€
It all starts with keyword research. Selecting which core term to optimize "next" doesn't have to be difficult but a few things need to be considered: Relevance: Core term must be very relevant to the business Importance: How important is this core term in relation to the other yet-to-be-optimized core terms Audience targeting: Will this bring in highly targeted traffic in comparison to the other core terms? Search volume: Will this bring in solid volumes of traffic in relation to the other core terms? Evaluate page/core term legitimacy Here you then take a closer look at the core term/page relationship to ensure that they are a solid match. With some sites, certain pages and core terms could be interchangeable. What you have to do here is to make sure that the page being optimized for any core term is the best possible fit. You have to be sure that the keywords can fit naturally into the content and are the best words to represent the message being conveyed. Core term/key phrase research Develop / rework page content Text usability review Page usability review SEO review
To rank a website top in search engines, search engine spiders/bots would recognize the website based on the content and the On Page of the website.The importance of the on page would depend upon certain specific parameters like Keywords, Description, Titles, H1/H2 tags etc. See this below link i hope you get benefit from this SEO guide http://www.slideshare.net/itsovais/seo-onpage-optimization-guide-presentation
To put it simply: Onpage optimization factor are this: keywords tag description tag title tag keyword density content customisation primary and secondary keywords to be sprinkled through the homepage H1 and H2 tags navigational structure internal linking structure site load speed I cannot describe about all in here, search in google of these factors and you will find loads of data