Google's crawlers are really not smarter than we are. They can't "read" a web page and understand its meaning. What they can do is look for clues in the page itself and its surrounding context to come up with a set of keywords that accurately represent the content of the page.

What is Keyword Optimization?
Keyword optimization is the process of fine-tuning a web page to raise the prominence of specific keywords. For AdSense publishers, keyword optimization ensures that the AdSense crawlers select the most relevant advertisements for a page. The more relevant the advertisements, the higher the click-through rates on the ads. Keyword optimization can also be used to target page content at higher-paying advertisements.
Keyword optimization is not a new concept, of course; it existed long before the AdSense program was developed. In fact, keyword optimization is one of the primary techniques for search engine optimization (SEO), the science (although some call it a black art) of improving a page's search engine rankings. The techniques described in this article apply equally well to either use of keyword optimization.

Keyword density is an important measurement that refers to the number of times a keyword appears in relation to other words within a web page. In other words, if a page consists of 100 words and the word "Google" appears twice in that list, then "Google" has a keyword density of 2%. Keyword density can also be applied to strings of words, usually two- or three-word phrases. For example, the 100-word page consists of 99 two-word phrases, so if the phrase "Google AdSense" appears once, then its keyword ratio would be just over 1%.
You want the important keywords on a page—the ones you want emphasized—to have the highest keyword densities. Very high keyword densities—anything over 10%—get flagged by crawlers as probable indications that the page is not a legitimate content page. Pages that engage in keyword spamming use high keyword densities in an attempt to gain better rankings, but most search engines detect the spamming and actually lower the page relevance as a result. A safer range for keyword density would be between 2% and 5%.
When optimizing your page for your keywords, don't miss out the important places to put your keywords.

KEYWORDS IN THE TITLE (the <title> tag).
Write a short title, not more than 65 characters. Between 6 and 9 words, with your keywords in it. Put your keywords in the beginning or near the beginning of your title. Do not repeat the keywords. Make the title as credible and eye catching as possible. Your title will appear as a link to your site on the search engine results pages (serps).

KEYWORDS IN THE DOMAIN NAME
Putting your keywords in your domain name adds some points to your search engine optimization efforts. Everytime you do a search, you will observe that some of the sites that come up on the first page of the serps have the keywords in their domain name. This is evidence that keywords in the domain name is important.
Use dash to separate keywords. Search engine spiders see a dash as space. For example, if your keywords are dance music. Use www.dance- music.com instead of www.dancemusic.com .The search engine spider sees the first as dance music which are your keywords. But it sees the second as dance music which does not make any sense as far as your keyword is concerned.

KEYWORDS IN THE FILENAME
For the same reason given above, the keywords should be used in the filename with dashes.

KEYWORDS IN THE META KEYWORD TAG (the <meta> tag)
Put your keywords here. Combinations and variations of your keywords. Common misspellings too. Don't bother puting many keywords here. This tag has little importance to your search engine placement. Also do not include words that do not appear on the page. Do not repeat keywords more than three times otherwise it would be considered spamming the search engines. Separate keywords and keyword phrases with comma.

KEYWORDS IN YOUR META DESCRIPTION TAG (the <meta> tag)
You have to craft your description very well because it is sometimes displayed with your title in the serps. Keep your description as targetted as possible. It is like writing a line or two summary of the page or site. Keep it between 20 to 30 words. Use your primary keywords near the beginning of the description. Do not use quotes or html or special characters.

KEYWORDS IN YOUR HEADINGS (the <h1>, <h2>, etc., tags)
When writing your H1....H6 headings, put your keywords in them. The heading is supposed to highlight the content that follows. So it is very important for the search engines. The heading tags are H1, H2,.....H6. H1 is the most important and H6 the least.

KEYWORDS IN YOUR PARAGRAPHS (the <p>, <b> and <i> tags)
Include your keyword or keyword phrase in the first sentence of the first paragraph and subsequent paragraphs. It adds relevance of your keywords to the content of that paragraph and the page as a whole. Also use your keywords in the text in the paragraph in such a way that it makes sense to a reader.

KEYWORDS IN TEXT LINK (the <a> tag)
Use your keywords in text links to other pages. Keywords in incoming links increase link popularity of your site. You can also bold keywords in the text of your paragraphs.