On-page optimization is defined as any tactic used to optimized your site by modifying the code on the pages. Below are the most important. 

• H1 Tags - The main topic of your page should be your H1 tag, the closer to the top of the page, the better.
  
• Title Tags - 2-3 of your main keywords should appear in your Title Tag per page. Make sure each page has unique title tags. The first words of your page title count the most.
  
• Bold, Underlined, and Italic Text - Don't overdue it, but try and utilize these features throughout your website. One of each will suffice per page.
  
• Keywords in the URL - Some search engines give favor to keywords separated by hyphens in the URL.
  
• Keywords in the filename - Search engines like keywords in the filename of the interior pages of your site.
  
• Meta Keywords - Almost a non-existent dinosaur of search ranking factors. Meta tags are still used mostly by MSN and Yahoo. Google does not use them at all.
  
• Alt Image Tags - Mainly used for the visually impaired. Alt tags can be used to increase or decrease the keyword density of a page. Use them to describe images.
  
• Keyword Density - Google loves keyword rich content but it's hard to write naturally and stay under their 2%-4% guideline. MSN and Yahoo give you a little room to maneuver with a generous 7%-10% guideline. A good rule of thumb. Write the content naturally and then use the tags above to adjust the density.
  
• Strong Internal Link Structure - Most SE's love sites that are easy to crawl and thematically related to the content of the receiving page. So create a site that allows robots to jump in and out easily. Internal links can become very powerful with the right amount of inbound links.
  
• Linking Out to Authority Sites - Yet another theory states that google favors sites that link out to authority sites. Yahoo and MSN haven't followed suit as of yet.
  
• Smaller vs. Larger Sites - Google loves large established content rich sites. Smaller sites can achieve high rankings with the right amount of inbound links but without the content, you still won't get much traffic. MSN and Yahoo don't mind smaller sites and rank them highly with the right on and off-page optimization.
  
• Original Content - Don't copy text from other sites. Take a look at the competition for ideas but stay away from copying even whole sentences. SE's are cracking down on duplicate content and you'll be penalized severely.
• Proper HTML and Code - Good code won't necessarily help you rank higher in most cases but it ultimately will help SE spiders navigate your site. There is a good validation tool located here