Inside the HEAD of your HTML document is where you place META tags.
<HEAD>The description of your page in Meta tags is what gets put into the blurb that search engines display. Keywords are the ones that they use to index your page (sometimes). Sometimes they use those in conjunction with the rest of your page, but give Meta keywords higher rank.
Only one search engine, All the Web, indexes the actual content of a web page.
To see how this works, visit the City of Santa Cruz web site, and view source. Look at the key words and description meta tags. Then, go to http://www.altavista.com/, and do a search using the key words City of Santa Cruz -- notice how the paragraph of descriptive text displayed by the search engine is the same exact text put by the web page designer in the meta tags of the City's page.
For more info on how search engines work, try http://www.searchenginewatch.com/.