I have no idea why anyone uses quotes for this term, unless (as in your last paragraph) they want to set it off from the rest of the text in order to define it!
Certainly "site selection" (using quotes here for definition) should in no way be a synonym for "site modification." Except for picking up sticks, pebbles and pine cones or any other item that might damage the tent floor, there should be no site modification whatsoever. If you need to ditch, you've picked the wrong place! In an emergency, fill in and smooth over the ditch and scatter needles or leaves over the top before you leave.
IMHO, one important aspect of site selection should be the contours of the site. I much prefer to have some slope or a hummock in the middle, so the site won't flood in heavy rain. Bathtub floor or footprint or not, no tent will stay dry inside if the site floods! (Been there, done that, had to abort trip due to soggy sleeping bags plus continued heavy precipitation.)
Another important aspect of site selection is not to pitch on vegetation. I haven't always been able to adhere to this rule in areas where there are too many dead trees to be safe (bark-beetle killed forest in the Rockies comes to mind), but if I absolutely must be on vegetation, I don't pitch the tent until bedtime and take it down as soon as I get up. I also find a place to do out-of-tent chores (such as cooking) on bare ground, figuring that at least when I'm awake and alert I have a good chance of avoiding the falling tree. This reduces the impact of feet around the tent.
A third aspect is safety, not setting the tent where "widow-makers" (dead trees or large dead branches) might fall on the tent.
Most wilderness areas have rules (which vary by wilderness area or even sections of a single wilderness) on how far your tent must be from water and from established trails. It helps if, before the trip, you measure off 100 feet to see how many of your paces it takes. There are a few places where wilderness rangers have been known to use a tape measure and write tickets if you're a foot too close. The Naches Ranger District of the Wenatchee NF in Washington is one of those. You might want to allow a few extra paces in such areas! Again, this can get a bit dicey if most of the trees in the area are dead. If I absolutely positively must break these rules, I consider the distance from water more important, but I also make sure my tent is out of sight from the trail, even if it's a little short of the 200 feet.
I generally try to scatter pine needles or leaves around or do other remedial measures after I've packed up to make it less obvious that a tent was pitched there. I do this as part of my policing the site to be sure I haven't left anything and that all bits of trash (whether mine or a previous occupant's) have been picked up.
IMHO, one of the uglier things left at campsites is a fire-blackened stone fire ring. I never could figure out why people do this. When I've used a fire for cooking, I've never wanted rocks there; I usually make a "hole" in middle of the fire for my pot and build up small sticks around it. The rocks make it more difficult to extinguish the fire, because live coals get hidden under the rocks. Plus, hot rocks tend to explode when water is poured on. I usually chuck those blackened rocks into the brush, out of sight. I'd much rather have a bare area around the fire as a buffer against sparks and such.
The only thing more ugly than the blackened rocks is chunks of unburned foil and plastic in the remains of the old fire. I hope that someday people will realize that foil does not burn and plastic rarely burns completely. It's OK to put it in the fire to burn off the food residue, but please fish it out after the fire cools and take it home. I'm getting tired of packing it out for you! (Of course I profoundly hope that "you" doesn't include anybody on BPL!)