We've talked a lot about what you can do to improve your site's SEO, but we haven't really explained how to tell if what you're doing is working. There are a bunch of useful tools out there to help you understand how your site is showing up in search engines, but the main one that all webmasters should be using is a product called Google Webmaster Tools.
Google Webmaster Tools are simple reports that show you statistics about how Google indexes and displays your website. Before using them you'll need to log in with your Google account and verify that you in fact own your domain name. After that, Google handles everything for you.
Here are a few different things you can do with Webmaster Tools:
See searches that result in your site
You can easily see a list of the search terms that are resulting in your site. This report shows you impressions (how many people saw your site as a result), clicks (how many people actually visited your site), click-through-rate (or CTR), and the average position of your site in Google results for each keyword.
See links to your site
It's important to know who is talking about you online. Because Google is indexing the entire web, they know all the sites that link back to your site. This information can help you understand if your link-building efforts are working, and it will also let you monitor your brand across the internet.
Google tries to find all the pages on your site by following all of your links, but there's no guarantee that they'll find everything. You can make sure that Google's indexing is fast and complete by uploading a sitemap (a list of all the pages on your website) to your Webmaster Tools account.
Much, much more
I've mentioned three of the most important features of Google Webmaster Tools, but there are all kinds of other things you can do. So if you run your own website, you should sign up right now. It's free, relatively easy, and incredibly useful.