Welcome to TONMO, the premier cephalopod interest community, and birthplace of #WorldOctopusDay and #CephalopodAwarenessDays. Founded in 2000, we are a large community of experts, hobbyists and enthusiasts, some of whom come together when we host our biennial conference. To join in on the fun, sign up. You can also become a Supporter for just $50/year to remove all ads and enjoy other perks. Follow us on Twitter for more cephy goodness.
When your octopus (or any other critters in the water) go to the bathroom, they release loads of ammonia into the water. Ammonia is poisonous to them. Luckily, there is a type of algae that eats ammonia and turns produces a substance called nitrite. Nitrite is dangerous too, but we're rescued by another algae that eats the nitrites and produces nitrates, which aren't very harmful.
If you have a big tank of saltwater and you put an octopus in, it will die pretty quickly because of its own waste. If you put a bunch of live rock and a couple little fish in, these helpful algaes will start to grow. This process takes a few months and is known as the nitrogen cycle.
There are a lot of good resources on the internet about the nitrogen cycle. Try saltaquarium.about.com or do a google search. You might also want to pick up some books about keeping a saltwater aquarium.
I, too, am learning that the octopus is not an instant-gratification pet!