What is On-site optimization?

How this on-site optimization helps for traffic? The SEO optimization according to my research could help on blog traffic, this is what I got and learned from the forum. It says that the On-site means formatting your HTML properly, closing all your tags even if the page shows correctly with them left open, have your links in text rather than images so the search engines know what you are linking to and can assign relevancy points, if they must be images for your links, use the IMG ALT tag so search engines can tell what it has to do with. Even though it obviously can't see and give relevancy points for your image, it can read your img alt. This is all pretty much common sense, make it so a computer can scan your site and get an idea of what it’s about and what you are linking to.