In the Internet city, links are the streets that search engine crawlers use to find their way around. By analyzing links, search engines like Google can determine the relationship between different web pages. Also, they can determine how relevant a page is for given keywords. Thus, links are votes of popularity. The more links to a page, the better it does in search engine results, most of the times.
Search engines are sophisticated pieces of software that use a lot of algorithms to determine how valuable links are. At the very basic, search engines evaluate links coming from different sites. If an inbound link comes from a popular website, then search engines will evaluate such a backlink as a valuable link. Similarly, if a link comes from a site that is down in popularity, then search engines assign a lower value to such links. Another noteworthy thing about backlinks is the fact that anchor text matters a lot. If a link points to a page with the right keywords, then search engines will rank the page higher. The inverse is also correct.
In summation, link building is not all about gathering outbound links. The value of the links matters a lot and as a website owner, you need to make sure you get valuable links to get right up there on page ranking.