As a web developer the term 'website optimization' generally means one of two (or both) things to me. The first being the process of improving the performance of the website by improving the code and files that make up the site content as well as tweaking settings on the server that hosts the site.
The end result of this would be a faster load time for visitors when they come to your site. For example instead having to wait five or more seconds for that huge graphic on the homepage to appear, it would pop up in one to two. This enhances the user experience by not making them sit around and wait.
For me personally, since I have a fast connection I am not accustom to waiting around for poorly optimized sites to load; so if they do take a long time I will quickly lose interest and move on.
- - - - -
The second thing that comes to mind is 'website [search engine] optimization'. This is the process of analyzing the website and its content in order to improve traffic/vistors through search engines.
This is the practice of analyzing a websites content, code, server, etc. in order to get the website to appear higher in the results list on search engines like Google or Yahoo!.
The example here is if someone searches in Google for 'plastic widgets' and you make plastic widgets you want your website showing up above your competitor on the results page.
There are many different things that go into improving this and it is a science unto itself. You can very quickly spend a lot of money for marginal results. Unfortunately this trade is plagued with as much smoke and mirrors as it is legitimate engineering.
Some initial reading to check out:
http://en.wikipedia.org/wiki/Search_engine_optimization
Google Resources (currently the most popular search engine):
http://www.google.com/support/webmasters
A research resource. Focused around Google, but a lot of these things apply generally.
http://googlewebmastercentral.blogspot.com
A blog written by the people who work on the engine.
This is a website I just recently started following:
http://searchengineland.com
Hopefully this was english enough for you.
