At first blush, this SEO tip seems pretty basic. The right title tag can make a big difference in your search ranking. Basic advice like that makes you kinda want to skip the rest of this entry, doesn't it?
Well the importance of <title> tags to SEO is obviously more than just "have one". Your choice of words is important, as it relates to your site, as it relates to the content of the page, and as it relates to other pages on your site.
Be Descriptive
The title tag should obviously be a reflection of the content of that particular page. If the page contains a list of your favorite movies, a relevant title tag would obviously be "My Favorite Movies" or "The Best Movies of All Time" or something along those lines. A bad title tag in that scenario would be "What I Saw Last Week".
Draw People In
The title tag is displayed to users in search results, and so it should be written in such a way that makes people want to click it - draws their attention and draws them in. So "Movies" may be a bit to cryptic, but if you used "Top 10 Movies You Won't Find on Anyone's Top 10 List" as your title, that makes people want to click it.
I see some sites where the URL is the title tag on every page, like if "--: mydemos.com :--" was the title tag on every page of my site. I generally think this is a bad idea. First, given how important title tags are, it seems a bit silly to waste it on repeating the URL. If they want to know the URL of your site, they can look at the address bar. You also lose the opportunity to draw people in, and lose the keyword matching opportunity as well.
Now, given that search engine will likely match the keywords search to a title tag, why wouldn't you just stuff all your keywords in the title? Well, at least two reasons why you shouldn't do that. There might be more. 1) It takes away from your title being relevant to the content of that specific page, and 2) search engines will notice that your title doesn't match your content and might penalize you for that.
Tips For Writing the Perfect Title
1) Each page of your site should have a different title
2) The title should be descriptive, to draw a searcher to click on your page
3) The title should contain some of your keywords, but not any irrelevant ones
4) Longer titles are sometimes better, up to 10 words
5) Optimizing your title tags might be the quickest and easiest way to improve your search engine rankings
6) Don't put your URL in the title, but do put the name of your site if it's different than the URL
Disclaimer The opinions expressed herein are my own personal opinions and do not represent my employer's view in any way.