SEO stands for "search engine optimization." It is the process of getting traffic from the "free," "organic," "editorial" or "natural" search results on search engines. This is accomplished through implementation of search engine friendly website architecture, optimized internal navigation and link landscape, as well as optimization of the content (comprised, at a minimum, of readability & usability improvements, and grammatical corrections). SEO is as much art as it is science, but at its core it is the discipline of making user-friendly & useful content understandable and easily digestible for search engines.
WHAT GOES INTO SEO?
To understand what SEO really means, let's break that sentence down and look at the parts:
Quality of traffic. You can attract all the visitors in the world, but if they're coming to your site because Google tells them you're a resource for Apple computers when really you're a farmer selling apples, that is not quality traffic. Instead you want to attract visitors who are genuinely interested in products that you offer.
Quantity of traffic. Once you have the right people clicking through from those search engine results pages (SERPs), more traffic is better.
Organic results. Ads make up a significant portion of many SERPs. Organic traffic is any traffic that you don't have to pay for.

SEM or Search engine marketing is the practice of marketing a business using paid advertisements that appear on search engine results pages (or SERPs). Advertisers bid on keywords that users of services such as Google and Bing might enter when looking for certain products or services, which gives the advertiser the opportunity for their ads to appear alongside results for those search queries.
These ads, often known by the term pay-per-click ads, come in a variety of formats. Some are small, text-based ads, whereas others, such as product listing ads (PLAs, also known as Shopping ads) are more visual, product-based advertisements that allow consumers to see important information at-a-glance, such as price and reviews.
Search engine marketing's greatest strength is that it offers advertisers the opportunity to put their ads in front of motivated customers who are ready to buy at the precise moment they're ready to make a purchase. No other advertising medium can do this, which is why search engine marketing is so effective and such an amazingly powerful way to grow your business.