In the world of SEO, the rule of thumb is generally that you should aim to make a great site first and foremost. Have great content, and people will link to it. Be relevant to what searchers are looking for, and Google will try to send people to you. Sure, there are ways to make a good site better. But ultimately if you have a web site no one really wants to visit, you should focus on improving it and not worrying about SEO.
But we live in a world where web traffic equals money. If a web site can attract a millon visitors a month, with advertising and other forms of revenue generation, it can often lead to tens of thousands or hundreds of thousands of dollars in the pocket of the owner. So people are always trying to find ways to get rankings that they don't deserve.
These techniques are sometimes called Black Hat SEO. While some people engage in them, there are penalties for doing some of these things on your web site can get you dropped from Google or relagated to the 60th page of results.
1) Keyword stuffing.
Let's say you are trying to make the worlds premiere site on basket weaving. If you created a web page that used the word basket weaving 200 times, you'd think that you would appear higher in search results than a page that only used the term 5 times. And you'd be wrong. Repeating a keyword dozens of times is looked at as clearly spamming, and can work against you. And it doesn't look good to viewers of your web site to see the same words repeated over and over.
2) Invisible text.
So you think you can add some keywords to a page, by using white text on a white background. And somehow that would make your site look better to visitors and trick Google into thinking those keywords are relevant. Anytime a technique is to "trick Google" its generally black hat.
3) Google-only content.
Perhaps you're a clever php developer, and you can recognize when the Google spider comes to your site and serve special optimized content for it. But when a real visitor arrives, you can deliver different content (and tons of ads). Again, tricking Google is a bad idea and can lead to penalties.
4) Link farms.
So you remember reading somewhere that Google counts the number of links pointing to your page, and that gives it a higher PageRank. That's partly true. But if you register 200 domain names, create one page sites that simply have links to your main site, that would be a "link farm" and you'd be penalized for using them. The sites that link to your site need to have their own credibility. Having hundreds of non-credible sites linking to you does you no good.
5) Auto-generated content.
Let's say you sold cars. Obviously it would be very difficult to rank highly for "cars". Could you rank for "Canada cars". Maybe not even that. But could you rank for "Toronto cars"? Perhaps. Could you rank for "Toronto Queen Street cars"? More likely. Spammers figured this out too, and developed a technique of creating auto-generated web pages. A program goes and creates one web page for every city and every country in the world for their keyword. And then they submit those to Google and wait for the traffic to come. In fact, to take it further, you could create a site with one page for each street in every city in every country in the world. And you'd think therefore you'd rank highly for "Toronto Queen Street cars". And again, you'd be wrong. Sites with millions of pages are rarely (never) relevant, and Google is smart enough to remove those from its index.
6) Bad neighborhoods.
Finally, if your web site is linking to hacking sites, spammers, porn, drugs, illegal activities, and generally to anything questionably moral, you could be penalized in terms of google ranking compared to sites that do not do those things. It may not be fair depending on your point of view, but who said life is fair?