Backlinks, also known as inbound links or reciprocal links are links received from an external web page. It is a link on another website that refers to directly to your website. Most search engines consider the number of back links as an indication of the popularity or importance of that website or page.
Building up your back links can greatly improve your chances of attaining higher positions for your web site’s keywords. Search engines consider each link to your web site (originating from an external web site) a vote for your site. Links coming from sites ’similar’ to yours can help a search engine determine what industry (or category) your web site belongs to.
In other words, if you have 1,000 links coming from external web sites that are dedicated to medicine, then (more than likely) the search engines will consider your site to be about ‘medicine’ or some other ‘health’ related topic.
The more links you have pointing to your site the more ‘popular’ a search engine considers your site to be. This is called Link Popularity.