The optimization of a website has changed very much since 2-4 years back. During those days you might not have enough competition and you came to the tops of the search engine results page without doing much work. A slight SEO on your sight would have made you to the top of the SERPs. But time has changed more and more websites have come to the fore, and hence the competition has also increased for your keywords. So these days when you do SEO you try to optimize it more when compared to the SEO that you used to do 2-3 years back. Certain SEOs try each and everything possible to bring their site on to the top position. But the major thing that I have notices is that the sites which are overly optimized tend to loose the battle and loses its popularity.
So the question is whether over optimization of your site results in any kind of penalty from the search engines? As per Matt Cutts there is nothing like an over optimization penalty in Google, but over optimization can make your site look spammy. Google hasn’t so far penalized any website for over optimization, but websites has losed its popularity among its users for over optimization. For example if your over optimizing your site with keywords, such as using them more than usual in Title tags, Meta tags, Alt Tags, content etc, it would sometime end as an annoying factor to the users. Even though if you rank on the top, the users would not be comfortable with this over optimization and your sites looks junky or scammy to the users.
In my experience over optimization of a site has always lead to some issues and resulted in the site losing its popularity and In my experience over optimization of a site has always lead to some issues and resulted in the site losing its popularity and traffic. If your content is over optimized with keywords, the users find it uncomfortable with going through the content, and content appear spammy to them. So the best thing to do is to come back to the basics, include keywords in a moderate way and make the site more user friendly. If the search enigines your website the most appropriate for certain keyword, no one can stop you from making your site appear on the top of SERP. Relevancy is the key for better search engine rankings and if your site is relevant to your major keywords, you dont have to worry too much.