The alt attribute is intended for use with text-only browsers or for use by the visually impaired. In essence the alt attribute substitutes a Web image with a text balloon: you can see the attribute in action by hovering your cursor over most images on this site.
As a Search Engine Optimisation tool alt attribute optimization has relatively little value: an SEO expert recently ranked all major aspects of a page on a scale from 1 to 10. He gave the alt attribute a value of 0.5! But in optimising your page every little helps and this particular aspect is easy to master, so there is no real reason not to use it. Simply don't expect miracles from it.
Alt is often erroneously referred to as the alt tag but alt is not really a tag itself, instead it's an attribute of the image img src tag. For the example below (mouse over), the image tag used would be something like:
img src=images/example.gif alt="See how the alt attribute works?"
Not so long ago Webmasters attempted to increase the keyword density of their page by stuffing the alt attribute with reams of keywords and keyphrases: don't think of doing this today because keyword stuffing or spamming will penalise your page. In spite of this, keyword stuffing is still widely recommended by some out of date resources. Don't follow that kind of advice. Instead choose from the following options:
1. Use the alt attribute where you feel it's useful and give it its true, natural value. If you can insert a keyphrase in one or more of the values then that's fine but don't force things. Over-use of the attribute will harm your rankings.
2. Do nothing: if you're not comfortable with the alt attribute then stop worrying about alt tag optimization now. This is hardly an aspect your page that can make or break its success in the Search Engines.