LSI stands for Latent Semantic Indexing, On a technical level, it's computers using complex mathematical models to figure out what text in documents means.
Basically, LSI can use the other words in your page to help it figure out what your site is really about. This helps solve the problem of synonyms (where two or more words can mean much the same thing) and polysemy (where one word can mean more than one thing).
Also, using LSI, Google can compare the vocabulary of your page to the words used on all relevant websites—and all the books in its database. Therefore, you're compared against authority sites and the experts who've written "real" books! Latent semantic indexing helps search engines to find out what a web page is all about. It basically means to you that you shouldn't focus on a single keyword when optimizing your web pages and when getting links.
The web pages on your web site should be related and focus mainly on a special topic while using different words that describe the topic. Use variations of your keyword and synonyms. That makes it easier for search engines to determine the topic of your site. Google’s new algorithm will scan content on a webpage and then analyze the phrases within to determine what other related [latent related] phrases should naturally occur in that document.
LSI can have a significant impact on the ranking of your web pages.
How can a search engine tell the difference between relevant information and irrelevant information? Some search engines use LSI to achieve this goal. LSI helps improve a search engines performance in three significant tasks: recall, precision, and ranking.
Recall is getting all of the relevant information available for your search.
Precision is getting only the information that is relevant to your search.
Ranking is getting all the information ordered in a meaningful way from the most relevant to the least.
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