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Google uses word stemming. Word stemming allows all forms of the word –Singular, Plural, Verb form as well as similar words and synonyms to be returned for a given search query. Several words could be generated from a single keyword using this simple technique. This can give webmasters more freedom when writing their content. Also, the resultant keywords help in the expansion of a website in different ways, which eventually draws more traffic. Keyword matching options like keyword stemming help in increasing the conversion rate.

Yes Nija! I just want to add some more in this regard.
Keyword stemming for search engine optimization is a great traffic draw for our
website.We can take diffrent forms of keywords by adding prefix, suffix to make it a new
keyword. This process multiplies our keyword possibilities limitless as words that are a
product of keyword stemming can expand in either direction, or even add words to the
phrase. keyword stemming not only provides a wider variety of keywords but also avoids
keyword stuffing and repetitions that might blacklist a website from a search engine when
it is actually not trying to fool SE's.

An example of keyword stemming would be if you took the word "optimize" and made additional
keywords out of words such as "optimizer", "optimizes", "optimizing", "optimized", "optimizable" and "optimization". Using keyword stemming on the word "optimize" would bring in hits for each of the stemmed keywords when they are searched for in an engine.

Thanks
Asha