Ask HN: How beefed up SEO bogs/websites make money, care to explain?

A few weeks back, there was a comment on HN [1] which described how he is making 10$/month from one domain name by doing some SEO thing. Which I don't understand completely. I don't even understand enough to search Google (or even to frame a good Ask HN here) so spare me the flames. Co-incidentally, I looked at the new project emails from my freelancer account a week by and found an Indian employer (who as it turns out, lives in my city) who was willing to pay me 75Rs for 500 words. I started working for him and made 500 bucks in a few hours, and he is still giving me work. But I was curious about the kind of work that he gives me, "write <number of articles usually 5 or above > <number of words> articles with <keyword> in it with density 1-2%" is the standard. I don't understand what his clients are doing with this content, I usually just rephrase or summarize the Wikipedia pages. Can anybody explain how all this works? And on another note, what is the effect o