The exact workings of Google computer programs are kept secret for obvious reasons but basically Google has downloaded the entire internet onto its computers and has indexed and arranged all that information so that it can easily find what you need when you want it.
Now with regard to your SEO what you need to bear in mind is that you need to make it as easy as possible for Google to find your web pages when someone is looking for information you have.
As Google wants to give the best service to its users it only wants to offer relevant search results so you have to make sure every part of your website is relevant to the keywords you want to target.
To make it really clear I like to think of it as labelling, if you label various different parts of your website with your target keywords, Google can easily see that your website is all about a specific subject, and when someone searches for what you offer Google will see your labels and put you right up there with other website that have similar labels on their website.
If think about when you are in a Library, you usually go to a particular section in the Library and start looking at the spines of the books to see if anything looks relevant, the next thing you do it look through the contents of a few books to really get a feel for what is on offer. If you can instantly see what you are after you will investigate further.
So, to make Googles job easier, label all the elements of your web pages with your target keywords and Google will start including your website in its search results.