Here's a real example of how getting inbound links to your website is vital. Let's say you are reviewing a new electronic device such as a new iPhone or Blackberry smartphone. In your article you might want to link to technical information about the electronic device found on a different page. It could be on the company's web site or even on another person's review of the device.
Some place in your post you may say something like, "According to the official iPhone 4 specs the iPhone is only .37 inches thick." And then you may link the terms "official iPhone 4 specs" to the site where Apple provides this content.
Google assumes this is a confirmation from you that the Apple specs site contains useful information - that it is a kind of "authority" on the topic. The more that web site receives incoming links from different web sites, the more Google views it as a reputable authority on the topic, and the higher that page will come up in the search results when people search for "official iPhone 4 specs".
This demonstrates how the authority of the Apple specs page is enhanced. But exactly the same principle applies to your own website. The fact that other people think your content is relevant enough to link to is a "vote" in favor of the quality and relevance of your content.
It's all about authority
This example illustrates several crucial things about incoming links, what makes them valuable, and why some links are more valuable than others. This information will help when you are link building.
First, it illustrates how the idea of "authority" is central to how Google (and the other search engines) work. Websites are ranked high in the SERPs (Search Engine Results Pages) when Google concludes they have "authority".
How do they get authority? First by containing a significant amount of material that has useful information about the subject matter. The more relevant content a web resource has, the more authority it will be assumed to have, and the more worthy of being recommended by Google as a good resource for that.
Second, the more links from other web pages a particular page, article or post has linking to it, the more authority it is assumed to possess. Google asks, "Why would other websites point to this one if it didn't give them relevant and useful information?"?"
Third, when a site has links from other sites from authority web pages these links are deemed better than links from non-authority pages. For example, if your review about the iPhone is pointed to from a page on a major site such as EnGadget-dot-com or ThinkGeek-dot-com that link is deemed more valuable than one from NobodyImportant-dot-com or some other comparatively unimportant page.
First and foremost, Google is concerned about the quality and relevance of your CONTENT. Google wants to point to content worth looking at. They assume your article has other resources linking to it because other people think it is worth looking at. So make your content worth looking at.