You are right on most points, but most of us aren't making websites for search engines, but for users. The only reason they are SEOing is because they want to get as many of those end-users to their website.
For example, I have an awesome designed blog with tons of useful articles for the end-users. One of the articles might be: "You should paint a boat in white", this might be a well-searched topic, but you're unsure of that. Now you can use Google and other tools to find out that in fact there are 50 times more people searching for "In what color should I paint a boat?".
With that information from a search engine, you can start blogging about painting the boat white. All the optimizing you do, is actually done to get those searchers to your blog. It has no point for making thousands of posts on your website if they can never be found. Or at least can be found, but if the keyphrase is in another order it will be searched a billion times more.
I hope I made my point clear, but my English got worse since I went to spain, sorry folks, but hope you get the point!