Thank goodness they've updated the SEO entry at Wikipedia - it used to be written by people who hadn't a clue about SEO.

As for how to do SEO - basically, there are two levels:
1. On-page optimization
2. Off-site optimization
On-page SEO basically is what you're doing - keywords on pages, titles, tags, etc. But in any competitive marketplace, these alone will not be enough.
That's where off-site optimization comes in, and usually involves link building for your keywords - ie, setting up links containing your keywords, and pointing to your website. This means search engines are urged to regard your website as important for your targeted keywords. Pretty essential in competitive marketplaces.