One of the most important aspects of high rankings and maintaining high rankings is the number of inbound links coming into your site, what is referred to as 'link popularity'. The nature to this 'popularity' is not so simple as just the total number of sites that link back to your site.

There is also a qualitative characteristic to the 'vote'. A page that links to a site that has a higher search engine ranking will contribute more 'points' to the ranking score then a page with a lower score.

Page 'x' linking to page 'y': the amount of importance conferred on page 'y' is proportional to the importance of page 'x' and inversely proportional to the number of pages 'x' points to. This is further explained in the 'Google Elaboration'.

Though both quantity and quality of external links count, the latter is more important. You may exchange reciprocal links with other sites, but make sure you pick them wisely.

You will find that if your site is full of high-quality, valuable and useful information, other sites will gradually pick that up and link to your web pages without your asking.
One thing you must NOT do is to create a number of web sites to fake a network of mutual links between them. You may end up seeing all your sites disappear from search engine results.

There are websites or web pages that consist of nothing but links. If they offer to link to you, don't bother. Instead of help, they may dilute your relevancy. Focus on getting links from pages that are considered the authority on the topic covered by your web pages.

One final chapter: SEO Pitfalls to Avoid – Stay Out of Search Engine Jail – Let’s go!