The primary purpose of alt text (alternative text) is for usability. It is designed to provide an alternative description of the photo for users who either can't or choose not to view images - blind users using screen readers for example.
If you do it right, you'll also get a little SEO benefit as well. Like all good SEO - do what is best for your reader and you'll get rewarded by the search engines as well.
Specifically, alt text should be a natural language description of the photo. Keep it to one sentence long, and my preference is to keep it under 10 words - usually 5 or 6. Since the photo should be relevant to the page, describing it will naturally include the page's keywords. If possible, try to get the keywords towards the beginning of the description, but don't make it unnatural in order to do this, as the benefit just isn't that great.
DO NOT artificially stuff unrelated keywords into the photo's description. That'll defeat the whole purpose, and the search engines will recognize it and ignore it.
Title text is a little different - it's designed to be the text that shows up in the tooltip as you hover over an image. The reason it gets confusing is good old Microsoft. In IE, if an image has alt text but no title text, the hover text will show the alt text. In other browsers, if there's no title text, there will be no hover text.
So best practice is to include both alt and title. NOTE! Title text is pretty well considered NOT to contribute to SEO. It can be used to describe the photo (you can just duplicate the alt text) but more importantly it can be used to create a call to action or instructions that will show when the photo is hovered over.
So... using your example of the backpack photo:
alt text: Lightweight blue backpack perfect for traveling.
title text: Click for more lightweight backpack ideas for travelers
Or for the second example...
alt text: Miniature TV fits in a backpack
title text: See more miniature backpacking TVs
There's no reason not to mention the second item in the photo, assuming it's related to the content of the page.
Don't use generic file names for your images! Before you upload them, give them a sensible file name that includes their keyword. So instead of uploading _DSC459083748.jpg, rename the file to lightweight-blue-backpack.jpg. Sensible means a couple of words long max, and separate words with a dash - not spaces or underscores. (This goes for any file you upload to the web.) Again, search engines assume the file name likely relates to the file contents, so that's another slight ranking signal.
To get the greatest benefit out of your posted images, it's also a good idea to include a caption for the photo that includes a slightly more thorough description of the photo as well. This can be in actual caption code, or just text entered right under or beside the image. Search engines assume text close to the image is about the image (since they can't understand the content of the image on their own).
There's a whole separate area of SEO dedicated to getting images to rank specifically in photo searches, but the above will serve you well to optimize them to help your page rank for your chosen keywords.
Paul