Page Rank relies on the uniquely democratic nature of the web by using its vast link structure as an indicator of an individual page's value. In essence, Google interprets a link from page A to page B as a vote, by page A, for page B. But, Google looks at more than the sheer volume of votes, or links a page receives; it also analyzes the page that casts the vote. Votes cast by pages that are themselves "important" weigh more heavily and help to make other pages "important."

mportant, high-quality sites receive a higher Page Rank, which Google remembers each time it conducts a search. Of course, important pages mean nothing to you if they don't match your query. So, Google combines Page Rank with sophisticated text-matching techniques to find pages that are both important and relevant to your search. Google goes far beyond the number of times a term appears on a page and examines all aspects of the page's content (and the content of the pages linking to it) to determine if it's a good match for your query.

Answer:Just in case you've forgotten, an outbound link is a url that you have on your site that points to another website.

In today's Google PR obsessed Internet world, everyone is completely focusing on getting in bound links to your site. While you should always be on a mission to get more sites to link to yours, you must not forget their polar opposites.

Remember, by having outbound links from your site, you are in essence "voting" for the site you link to. This is part of the entire ranking algorithm process for all the search engines. The idea is, that if two sites are similar in content and design, a site with more links pointing to it would be considered more important by the search engine.

So then, why should you help out any other site? Actually, by carefully linking to other relevant sites, you are increasing the relevancy of your own site.

Pretend I have a pizza shop, and I am located in Anywhere, USA. It's a typical site that displays types of pizza, store location, hours, and coupons. I also know the power of outbound linking. For this case, I am going to link to 10 sites: Domino's, Pizza Hut, Little Ceaser’s & Papa Johns. Next, I link to 6 sites that are physically located in Anywhere, USA. (And their physical addresses are listed on their sites.)

Now, I will switch roles and view the site as a search engine spider. I navigate through the site, and determine that this site is about pizza. Then I find a resource page and discover some well-known links (Domino's, Pizza Hut, Little Ceaser’s & Papa Johns - and as the spider I know that these are major players in the realm of pizza). Next, I find 6 links to sites located in Anywhere, USA.

So, as a happy spider leaving the site, I now know that the site I just visited is about pizza (site content and links to the major players of the pizza industry), and that it is located in Anywhere, USA.

Next, I visit one of the 6 sites listed as a resource in Anywhere, USA. I find the local address, and it has the same zip code as the pizza site I was just at. Now I know how these two sites are related to each other.

Taking into account the fact that this local pizza shop has also linked to the major pizza chains, as the spider, I am lead to believe that this shop has relevancy to the zip code of Anywhere, USA.

So, as the spider returns the information to the database to be processed in the algorithm, it has pre-sorted some search results based on the links your site points to.

Another benefit of outbound linking is Geo Targeting, or Local search. There is a lot of speculation that local search is the next big trend in Search Marketing. While only time will tell, it won't hurt to have your physical address listed on your website for those who will be embracing local search.

As an experiment, I created a site with a very unique url (to avoid the possibility of people finding it by accident), and I made it only 1 page long. The only thing the page consisted of were 80+ outbound links to relevant sites in the SEO industry, tools, forums and some tutorials. When the PageRank was first updated for the site, it came out of the box with a PR of 3. It has since fallen to a PR of 2 (now that I’ve pointed a few sites to it!).

The whole point of this experiment was to see how outbound links affect your own rankings of your site. I was able to generate a PR of 2 based entirely on linking to authority sites in the SEO industry. So, take the time to link to some relevant sites, the big names (if any), and enjoy the power of the easy, outbound link.

-To your online success! 

Back links are also known as Reciprocal Links. A reciprocal link is an agreement between two webmasters to provide a hyperlink within their own website to each other's web site. Generally this is done to provide readers with quick access to related sites, or to show a partnership between two sites.

Back links can help to increase traffic to your web site in two ways. First you will probably have some viewers visit your site from clicking the reciprocal link directly. Secondly, most Internet search engines also take into account the number of web sites which contain links to your web site; the more hyperlinks to your site found, the higher up in the search engine rankings (depending on the search term) you'll find your site.

some website directories are dedicated to certain  group.

for example:  classified link directory
                        reciprocal link directory