Keywords have to be one of the trickier parts of this SEO business. And one of the more neglected.
Why are keywords so important? Because, keywords are used by search engines to facilitate fetching results for an online searches.
There are two basic approaches to dealing with keywords.
There is something to be said for the ignore keywords approach. If you don't really know what you are doing the effort to monkey around with keywords might be so off-putting that you give up on the whole idea of doing a website in the first place. In that case it might make sense to just do your website, create the best content you can and worry about keywords later.
But then again there is much to be said for getting it right in the first place. If you have an existing website then it is about time to start the process of getting it right. If you are just starting to build your website, it is definitely worth the time to investigate keywords.
Picking keywords requires combining several factors. Two important factors are:
Your first task it to use your wit and wisdom to make your best guess at a few keyword phrases that will both represent your website and actually be used in real world searches.
After you have a set of best guess keywords, it will be time to poke around in Google's Adword Tool Kit to refine your keywords.
See SEO Must #2b: Brainstorming For Keywords for the next step in this process.