Paid traffic is pretty self explanatory: you pay Google or Facebook to show an ad to people based on keywords or audience behaviors. While you can also pay someone to do your SEO, the end goal is to drive traffic to your site from non-paid sources, which we call organic.
An example of an organic visit to your site would be someone searching, best plumber in Austin. The person would then scroll past Google’s paid ad block and click on the first SERP listing because Google thinks that particular site or page is the most relevant answer to the user’s question.
SEO is the practice of actively improving your site to drive organic traffic.