You can generate a lot of traffic and get high search engine rankings with a blog because the search engines love a blog. The search engines are the number one sourse of free traffic. Therefore, you need to optimise your site or blog for search engines. Since a blog is always generating new content and they are very social web pages that generate a lot of links. Add in a link fest or a Carnival and you can have hundreds of visitors and links to your blog. But to generate all those free traffic hits, you need to not only optimize for search engines, but for humans as well. If a visitor doesn't find useful information, they will leave, never to return.
A blog is one of the most powerful tools in the war to generate free blog traffic. Free blog traffic is relatively easily generated, and the effect of the blog's traffic can boost the traffic of your main page. In order to generate a lot of free traffic, you must create a page that both search engines and humans like. Both human readers and search engines love content that is on subject and unique and that is being updated on a regular basis. The more often that you update a page the higher it will rank on the search engines. Human beings will read the page, and if it is not useful, they will quickly leave. You have about 10 seconds to get a visitor's attention. Then, either they will readon, or they will click back and leave. Blogs by their very nature are being updated on a daily basis. Also, blog readers will add their comments. Either way, you get a lot of new, and hopefully, useful or interresting content. Each of those posts will ping the search engine which will then send a spider to the page. Every time the spider visits your page it updates the ranking based on content, keyword density, the number of visitors, and inbound links. Therefore, a blog can gain PR fairly rapidly. A link from a high PR page or blog with a good keyword rich description, espcially from a website or blog with a similar keyword topic, will do much to raise another page's ranking and PR. Even failing that, the inbound links should send a lot of free traffic to your site.
For every rule there is an exception. Recently a blog having almost no traffic and no backlinks to speak of ran a post about Congressman Mark Foly. It was only the seventh post in about two months. Someone found the post and the next thing you know, the post is all over the news. That one post on an obscure blog brought down a US Representative. No matter what the motivation behind the post, it shows one thing, contraversy can really bring the traffic. That shows also that any one post or any one visitor could be the one that explodes your blog or websites' popularity and traffic. Another clue to how powerful the blog can be is the biography page for Pres. Bush Jr. being listed under the search term "miserable loser". That was accomplished by a few bloggers linking to the site with that description in the anchor.
Every link that is inbound to your page, a website or a blog, is a vote for your page. Since bloggers are more likly to link to another blog than a webmaster is to link to a traditional website, it is easier to get a lot of inbound links for a blog than a website. Also. blogs tend to have a higher PR than a similar website would have, because they have frequently updated, keyword rich, content. And that is just from the blog's author's own posts. Blogs usually have several regular visitors who add their own comments as well. These factors mean that a blog will generate more free traffic than a similar website would.
One of the most powerful ways to generate free traffic to your blog is the carnival. One link from instapundit will send hundreds, sometimes thousands of visitors to your blog. Instapundit will usually post a link on his blog to any host of a carnival who e-mails him and politly asks for a link. That generates an instant spike in traffic and adds a link from a very high PR blog to your blog. As an added bonus, the traffic spike, while not permanent, does add some new longer term readers.