From a search ranking perspective links are one of a website’s top concerns- probably the most important concern as linking often trumps content in terms of where a site will place for search queries.
As always, a great source for SEO information is Matt Cutts blog over at Google where a careful read of his SEO posts will bring you a lot of enlightenment about Google do’s and don’ts. His post of a few days ago was particularly interesting as it deals with Google’s crackdown on paid links that try to pass pagerank. This is one of the most contentious topics in SEO and an area where I wish Google would be more transparent since there are so many linking approaches that are not paid but may be questionable in the eyes of Google. The fact that they depend so much on reporting of paid links is also a problem as it allows aggressive SEOs to “game the system” by selectively reporting competitors while creating complex and undetectable linking for their own sites.
However my biggest concern about linking is not something Google can fix, and that is the fact that even in the world of what Google views as legitimate, authority passing links, strategic linking to “friend and associate” websites has largely replaced the early approaches to linking where people work to simply link to a great resource for the reader. As blogging has exploded into prominence and linking importance this problem has become critical, and we now see that early and well established blogs will outrank far better resources that have few incoming links because they are new. Ideally, the older resources would be better stewards and link out to the good new resources but generally the stakes have become too high as links are now correctly seen as more valuable than advertising and bloggers have become too reluctant to link to other resources unless there is some reciprocal benefit.