Without traffic, a website will struggle to fulfill its purpose, whether it is to inform, entertain or to sell. Search Engine Optimization (SEO) techniques are important because a website or blog that is optimized is more likely to be found on Google, MSN or Yahoo. This in turn leads to more traffic. It is in the selection of these techniques that the differences between white and black hats can be seen.
In the old Western movies, the one wearing the white hat was seen as the good guy; the one wearing black was the bad guy (and the one wearing gray was the shifty guy who did whatever benefited him). In the world of SEO, these terms have significantly different meanings - although some people take the moral viewpoint that the white hat is still the 'good guy'. On the other hand those who follow black hat techniques would say that being black hat is about competing with the search engines while white hat is about competing with your fellow webmasters.
White hat is the term used to describe techniques and methods that fully comply with the Search Engine guidelines (or as some like to say it is 'doing everything Google tells you to do'). For example, writing original articles for your site would be considered white hat, while the use of software to generate thousands of pages of content automatically would be considered black hat.
Of course, nothing is that simple in reality and there are numerous areas that would be considered gray. For example, using some form of content generation software to modify PLR (private label rights) material to generate pages lies somewhere between these two extremes.
Admittedly, automatically generated black hat sites can generate some serious short-term profits. However, the search engines are getting smarter with their algorithms and when they discover the use of black hat techniques will generally de-index the pages of a site so that it won't receive any more traffic from that source. In particular, if the software being used for automatic generation leaves telltale signs, known as a footprint, the process of de-indexing can be rapid. The other main problem is that many of these techniques generate content that the search engine spiders love, but are useless for humans (although it can make for a laugh to try to read some of it).
White hat techniques focus on developing content that is original and useful to both spiders and people. The main drawback with white hat strategies are that it takes longer to reach your desired goal, but the results can be significant when you reach there. The other nice thing is that there is much less chance that you will be de-indexed by the search engines and that your site, and any profits generated, will be around for the long haul.