History

SEO began in the mid-1990s, as the first search engines were cataloging the early Web. Many site owners quickly learned to appreciate the value of a new listing in a search engine, as they observed sharp spikes in traffic to their sites.

In the early 2000s, search engines and SEO firms attempted to establish an unofficial truce. There are several tiers of SEO firms, and the most reputable companies employ content-based optimizations which meet with the search engines' (reluctant) approval.

A Few Ethical methods

Notify search engines
The first step is to notify the search engines of the existence of the site. This is accomplished by various means, the easiest of which is a link from a different site.

Content optimization
The content of each web page is objectively evaluated by analyzing included keywords. While previous analysis used the now out-dated keyword density method, the analysis now includes factors such as proximity, distribution, ocurrence, and on-topic issues.
Some Methods commonly used to optimize content include:

Page rank improvement
Google introduced the concept of page rank as an indicator of an individual page's value based on the quantity and quality of links pointing to it. Inbound links are weighted by the popularity of the linking site.

Page Rank Simplified

Suppose a small universe of four web pages: A, B, C and D. If all those pages link to A, then the PR (Page Rank) of page A would be the sum of the PR of pages B, C and D.

PR(A) = PR(B) + PR(C) + PR(D)

But then suppose page B also has a link to page C, and page D has links to all three pages. One cannot vote twice, and for that reason it is considered that page B has given half a vote to each. In the same logic, only one third of D's vote is counted for A's Page Rank.

PR(A)= \frac{PR(B)}{2}+ \frac{PR(C)}{1}+ \frac{PR(D)}{3}

In other words, divide the PR by the total number of links that come from the page.

PR(A)= \frac{PR(B)}{L(B)}+ \frac{PR(C)}{L(C)}+ \frac{PR(D)}{L(D)}

Finally, all of this is reduced by a certain percentage by multiplying it by a factor q. For reasons explained below, no page can have a Page Rank of 0. As such, Google performs a mathematical operation and gives everyone a minimum of 1 − q. It means that if you reduced 15% everyone you give them back 0.15.

PR(A)=\left( \frac{PR(B)}{L(B)}+ \frac{PR(C)}{L(C)}+ \frac{PR(D)}{L(D)}+\,\cdots \right) q + 1 - q

So one page's Page Rank is calculated by the Page Rank of other pages. Google is always recalculating the Page Ranks. If you give all pages a Page Rank of any number (except 0) and constantly recalculate everything, all Page Ranks will change and tend to stabilize at some point. It is at this point where the Page Rank is used by the search engine.