What is meant by Alt Tag and how to benefit from it?

Alt Tag is the alternative attribute used to provide description about the image. For example If there is an image of cat playing with a ball in a web page , the search engine are unable to cache images so in order to guide them we can provide a description in alt tag such as a white cat is playing with a woolen ball this can help the search engine to visualize the situation and they carry on the process of indexing keeping the same things into consideration. To put it more precisely it will be as

img src="images/cat.jpg" alt="A white cat is playing with a woolen ball" title="A white Cat"

It plays a viral role in SEO for websites.
Even when you are using the images for a decorative purpose, make sure to use an empty alt i.e. alt="". It is not that your website will be accessed from only the web browser but in some instance even blind use screen readers to describe the images to then and if you don't use the alternative text then the screen readers have no way of conveying that to the end users. The most important part of using alt tag is that your images once cached will be shown in Google images results and that too for the keyword used by you to describe the image. For example: If any one makes a search in Google images with the keyword of cat than they will be fetched with the result of cat picture, here the chances are more that you may be found by the visitors as the competition in such searches are very low, infact many of them are unaware about such things. So why are you waiting for just add the relevant tag in the alt tag of the images and see the number of visitors increasing in your site. At last make sure never to use spammy or too lengthy words under alt tag, a 7 to 10 words are good enough to describe the situation and even one or two keywords can very well accomplish the task.