The process of creating inbound links to one's own website. This can be done through reciprocal links, being listed in e-zines, newsletters, directories, search engines, etc.
Why bother with link building? Link popularity and link quality are very important because every major search engine now considers them as a part of their ranking algorithms. If you don't have links, you won't rank well for competitive keywords.
General directory submission is a time-consuming process which involves a lot of patience and understanding, but all this is worth because of the wonderful results you achieve. A continuous directory submission process has many benefits as it broadens your presence on the web.
The process of link building is essential since search engines lend very high importance to it. The logic applied by search engines is very simple: if a good website thinks you are good enough to link to you your pages must be relevant to people. Obviously link popularity can help raise your rankings but only if you follow the right procedure.