Getting other sites to link to your site increases your "Site Popularity" in the eyes of the search engines, and may just be the one most significant factor that will affect your search engine ranking.
Likewise, linking related web sites to your web site increases your sites popularity and those that are linking to you. The more you have linked to your site the more the multiplication of sites begins to increase.
Link exchange is easy because everyone who owns a web site also want to increase their site ranking. Inviting your colleagues to have their link attached to your web site in exchange to have your web address attached to theirs is rarely turned down.
It is also very important that you only link related sites to your site. Allowing unrelated sites will actually work against you and your ranking will go down. The higher your ranking the closer to the first page you will get.
he image below is an example of how search engines view a network of web sites' usefulness to those searching their directories for products and services. It is very important to the search engines that the most relevant content is displayed to their visitors.