SEO - Making your page "optimal" for visibility in various search engines. Nothing social about that unless you're using something like Mahalo.
Social Media Optimization - the phrase Social Media Optimization was first invented by Rohit Bhargava.It means Making your web pages and your site content easy to bookmark, share, recommend to friends, to comment on or even to syndicate on Facebook, other blogs etc. Things like adding chicklets for Digg and Delicious, email this link options, post to Facebook, embed video links, add to social shopping sites (for ecommerce)...
Social Media Marketing - this is the off-page stuff. This gets into link building a bit, if you're using social networks to build links. For example, you make a certain type of handmade Stone (Granite , Marble ETC....). You can join the social shopping engine Etsy which focuses on hand-made and Kitchen COuntertops, submit your products to the social shopping site FiveLimes that loves the green friendly business, and write an article about how your product saves the planet and post it on Green friendly sites like Care that allow you to post your own blog entries. Include keyword optimized contexual link within the article, and you're SMM'ming and SEO'ing.
I agree that these are e tenants to social marketing (SEO, SMO and SMM) and that one is focused on your site and one is focused in neighborhoods away from your site.I also see SMO as not only onsite but also in optimizing results that are offset with SMM efforts. The two components are essential in any great SMM campaign.
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