Any link from one website to another is called a backlink; and there are two good reasons that you need them: exposure and Search Engine Ranking.
Exposure gives more opportunity for your site to be visited by real people and search engine crawlers. The more links pointing to your site, the more visible those links and the more interesting their anchor text, the more visitors you will snatch for your website. More visitors equals more sales opportunities and more ad views.
In most circumstances, search engines are where most of your site’s traffic will originate. The more backlinks you have, the more relevant the linking page’s theme to your page and the more relevant the link’s anchor text to your page then the more value that backlink adds to your page’s search engine ranking.
You will have seen Page Rank, also known as PR, mentioned in most webmaster forums, blogs and “how to…” guides etc… Page Rank is a calculation of a webpage’s value as deduced from the number, relevance and quality of its inbound links. Most webmasters crave it whereas some think it is less important now than it used to be when it was first defined. What many webmasters don’t realize is that Page Rank is a patented process that is solely licensed to Google i.e only Google can use the Page Rank analysis algorithm that was devised by Larry Page (hence “Page” Rank). Other search engines like Yahoo and Bing use a similar algorithm to calculate a webpage’s value and relevance to their users search requests but Page Rank is specific to Google. For the purposes of the rest of this article I will use the term Page Rank generically to cover the PR algorithm used by Google and similar algorithms used by other search engines.
Page Rank (and the similar algorithms used by search engines other than Goolge) is part of the calculation that search engines use to estimate a webpage’s Search Engine Ranking. I don’t think anybody fully knows the full appraisal system used to calculate a page’s Search Engine Ranking because it is a closely guarded secret but it is common knowledge that most search engines determine part of a webpage’s Search Engine Ranking by comparing backlinks: the more links into a website, the more valuable that website is deemed; and a web page with high PR is more likely to show at the top of a search engine’s results than a page with low PR with the same or similar content.