A backlink, or inbound link, is essentially a citation to another resource. A backlink, when clicked, connects the user from some other website to the web resource, which may be a website, webpage, or web directory. Backlinks are used in Search Engine Optimization or SEO. Backlinks are used as an off-page technique to increase the ranking of a website according to search engine results. Having links to other resources is an example of an on-page technique. The number of links and quality of the sources where the links are found affect search engine algorithms in determining how a page ranks. Backlinks can take the form of a website URL or Anchor Text.
Jake writes a blog about digital marketing. On his blog, he references Digital Shift and provides the URL to their website's homepage. This backlink to http://www.somethingsawful.com helps Digital Shift with their off-page Search Engine Optimization and helps Jake's blog with his on-page Search Engine Optimization. Jake could use the anchor text 'Digital Shift' instead of the URL to link to Digital Shift's website.