In the case of keywords, search engine algorithms don't like it when you use them too often (a.k.a. keyword stuffing), especially the big 'G'. And Google punishes such misbehavior (just like my mother used to, though Google will hit you with a lower search ranking, rather than a wooden spoon).
Conversely, don't use keywords often enough and they lose their meaning – drowned out by the background 'noise' of the other words that make up the rest of your content, but have no direct relationship to what your website is actually about.
Remember: your keywords are the search terms you've decided people will use when looking for sites like yours. So it's important to get the balance right, and to make sure your keywords are positioned correctly as soon as you begin to create a website. It's widely agreed that no one knows exactly how search engine algorithms work, hence kidnapping Sergey Brin or Larry Page won't do your own website ranking any good (and would probably be illegal, earning you a wooden spooning as well, at the very least). But playing around with keywords, and observing how they alter search engine rankings, has enabled us to deduce a certain number of things about how they work.
It's generally accepted that keywords work better for search engine rankings in the first paragraphs of your page contents. You'll want to make sure you start talking about them early on, whenever you're adding a new page of content with your website builder.
While your keywords need to appear more often than other words, pushing your keyword ratio too far has negative consequences. Try to keep it reasonable – the exact number is open for debate, but a keyword ratio of 3% seems universally accepted. You can calculate your keyword density manually by dividing the number of times your keyword appears by the total number of words on your page, then multiplying it by 100 to convert it to a percentage (you knew that, I'm sure). If you've got a keyword phrase rather than just a word, the formula will involve multiplying the number of occurrences of your phrase by the number of words it contains, then dividing that figure by the total number of words, before multiplying by 100 to get a percentage.
If you hate doing math, there are plenty of free website tools around to analyze your page's keyword density for you; a figure under 3% and you can think about finding places to add your keywords. Anything over 5% and you've probably gone too far – if your text sounds weird to you, your visitors will probably think it sounds even worse, and not only will Google punish you, but your visitors will too - I challenge anyone to show me a text with a keyword phrase density over 5% that isn't verging on the ridiculous ...
After all, while keyword density is a part of attracting visitors to your website, writing things they'll actually find interesting is of far more importance to making a website a success, wouldn't you agree?
No, this is not a discussion about lexically challenged motor-heads, but rather the follow-up to last week's fireside chat about SEO keyword choices. Now that you've got your key search terms figured out, you really should take some time to figure out how you're going to use them in your writing.