Squidoo is sort of web page builder but the concept is a bit bigger.
1) you are put in some sort of category where you are ranked among similar pages (lenses)
2) you can promote that page by using full arsenal of
SEO (e.g. link building, link bites, linking between other lenses etc) this way improving your rankings and getting more traffic;
3) squidoo can be used then for promoting your products, adsense, building backlinks etc (btw, the higher you rank within category, the more internal links you get and more PageRank will flow into your lense from the big Squidoo itself boosting your page and links even more)
4) as with many web 2.0 properties you want to have multiple listings for your offers, e.g. your site is ranked n9, your squidoo lense is ranked n6, your other wetpaint page is ranked n12, your digg post ranks as n4 etc
I hope this gives you some ideas how this works.