I see this bright yellow seal on more and more sites. Satisfaction guaranteed!

How can you guarantee that? I mean... you can TRY. You can do your utmost best.

However there will always be customers that won't even be satisfied if you give them their own dedicated server as a christmas present.:D

The terms of their satisfaction guarantee is probably outlined in their Terms of Service... but I would guess that what it means is that if a client is not satisfied they can cancel and get a refund?

How can you guarantee that? Guarantees run on the notion that if they are not satisfied they will get all of their money back. It is impossible to please all of the people all of the time but it is not impossible to give them a risk-free opportunity.

A Satisfaction and/or Uptime Guarantee isn't something that says "YOU WILL BE SATISFIED" nor does it mean "THE SERVERS WILL NEVER GO DOWN". Instead it means, if you are not satisfied or the servers do go down you will be refunded for that problem therefore guaranteeing that you are not paying for something that wasn't working out for you.

These are important to have as a client and important to enforce because it is the penalty of not satisfying the client or having downtime that costs the vendor money and therefore enforcing the guarantees helps to encourage them to try harder and to take their promises seriously.