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[edited by: mack at 9:07 pm (utc) on Nov. 11, 2008]
[edit reason] Examplefied [/edit]
"A simple way of seeing that underscores are not treated as spaces is to type a phrase into the searchbox, but with 2 words joined together by an underscore. Do the search and look at the “Results 1 - 10 of about …” bit. Each identified, non-stopword, word is linked to a definition, but not the pair that are joined by an underscore."
This worked for me. I typed Mattcutts, matt_cutts, and matt-cutts into Google and for 'matt_cutts' i did not find his self named website.
I think I have broken a lot of rules with my posts and am very sorry.
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Keywords within a domain can help, but there are a of other factors that weigh a lot more, for example inbound links. The more IBL's you get the better your chances are of ranking well.
Here's where it gets interesting. Having keywords within your domain make it more likely to gain good anchor text. Lets imagine two websites, one is example.com the other is keyword1-keyword2.com
In bother cases you send out link request emails and some links are out in place. Some websites will link to you using good anchor text, other will simple link to you using your domain name as the clickable link. In the later case you still end up with good anchor due to thur domain name being your keywords.
To be honest this doesn't work as well as it used to, but can still have a bit of an effect.