Permalinks are the permanent URLs to your individual weblog posts, as well as categories and other lists of weblog postings. A permalink is what another weblogger will use to link to your article (or section), or how you might send a link to your story in an e-mail message. The URL to each post should be permanent, and never change — hence the name permalink.

Wordpress default permalink settings are what we like to call "Ugly" and it would like something like this: http://example.com/?p=N

N is going to be replaced by the post or page ID number. This type of permalink is no good when it comes to SEO and it is indeed "Ugly".

The first thing you should do after installing WordPress is to change your permalink structure. This is very easy to do.

As you can see in the image, you need to click on setting on your Wordpress menu bar on the left. Than you will need to click on Permalinks (marked with the red arrow) and then you should enter the desired permalink structure into the Custom Structure field (marked by the red circle).

I would suggest two permalink structures you can use. You should change your permalink into either /%postname% or /%category%/%Postname%. This will have a great effect on your on page SEO and it is very simple to do. I personally started using the /%category%/%Postname% option and making sure that my category is named after my main keyword phrase. This way, my keyword phrase will be mentioned several times in the URL (the domain name, the category and probably in the specific post) and it seems to be a good thing SEO wise.