The optical viewfinder is the small window you look through to compose the image.
Unless it is of the TTL type (through the lens) it is usually separate from the lens. This implies it will see the subject from a slightly different position and will therefore suffer from parallax error. Over a long distance, the error will be hardly noticeable but with close ups however, this may be a problem. Some manufacturers get around this problem by showing parallax markings in the viewfinder to show where the outer limits of your image will be when taking a picture.
An alternative would be to use the LCD screen to frame the image, because this shows the image exactly as the sensor sees it. Additionally, optical viewfinders do not show 100% of the scene to be captured. They are mostly limited to about 85% of the actual frame.
A TTL type viewfinder will usually show more of the actual image, although not usually the full 100%. The image as the lens sees it, is relayed through a prism or mirror system directly up to a focus screen which can be seen through the viewfinder. Because of its complexity this type of viewfinder is only found on high-end, professional digital cameras. Additionally they may have an LCD status bar along the bottom of the viewfinder to show the camera's settings.