SEO stands for Search Engine Optimization. It's the process that Google and other search engines use to determine which order to deliver search results when someone searches for anything.

The actual practice of Search Engine Optimization aka SEO is the process of a website owner, or service provider doing what is necessary to have the search engines deliver the website or business at the top or near the top of their listings.
This, in turn, allows for your website to get more traffic, and for your business to attract more attention and (if sales-oriented) make more sales or your products or services.