How a keyword works
A keyword is a phrase you have chosen to go after. It does two different jobs depending on where you use it, and confusing the two causes a surprising amount of wasted money.
In Google Ads and Microsoft Advertising it is a switch. You add a keyword to an ad group and, subject to its match type, it makes your ad eligible to enter the auction when somebody searches something the platform judges close enough. Broad match casts wide, phrase match narrows it, exact match narrows it further — though none of them means literal word-for-word matching any more.
In SEO it is a target rather than a switch. Nothing is submitted to Google. A keyword simply describes the request a page is built to answer, and the engine decides on its own whether the page deserves to appear for that request and for the many related wordings around it.
Why keywords matter
They force a decision about who a page is for. Writing down the phrase a page is meant to win, before the page exists, keeps the writing pointed at a real request instead of drifting into general description. It also stops two pages being built for the same request, which is the usual cause of a site competing against itself.
In advertising the stakes are more immediate, because the keyword list is the budget. Every phrase you add is permission to spend, and every one you leave out is demand you cannot reach. Getting the list right is most of the work of a search campaign.
Common mistakes with keywords
Chasing volume is the first. The phrases with the most searches are usually the vaguest and the dearest, while the longer, more specific ones carry the buying intent. A page ranking for a broad term it cannot serve earns visits that go nowhere.
Stuffing is the second. Repeating a phrase through headings and paragraphs does not help a modern search engine, which reads meaning rather than counting occurrences, and it makes the page worse for the person reading it. The third is treating the keyword as identical to the query. What people actually search is broader and messier than any list, which is why the search terms report so often shows spend against phrases nobody would have chosen.
How to act on it
Start from the request rather than the phrase: decide what the searcher wants to do, then find the wordings people use for it, then map one request to one page. Keep a simple record of which page owns which target so nobody publishes a second page for the same job — that mapping is the backbone of any serious keyword research exercise.
If you advertise, read the search terms report often and add negative keywords, because a keyword list left alone drifts wider over time. And write for the person: use the phrase naturally in the title, the opening lines and one heading, then answer the question properly and stop counting.