All modern search engines use the quality, and number of sites linking to your site as a major factor in calculating your PageRank. Which in turn determines how close to the top you site will appear in search results a.k.a. - the holy grail of search engine optimization.
In this context, the most obvious use of back links is to check out who’s linking to your site today. If you don’t have very many quality sites pointing to you, then you probably don’t have a great page rank. On the other hand, if you do have a lot of quality links, and you still aren’t showing up well in search results you may want to check with Google or Yahoo’s webmaster tools to see if there is another problem with you site – like an error in your robots.txt file.
How do you get more quality links to your site? The best way is to give people a reason to link to your site. Is there anything on your site that people would want to talk about today? What could you build or write that would get people talking? A few examples could be good detailed information about your products or industry, case studies, or maybe some free online desktop themes that look cool and promote your brand.
The second step is to go talk to people who might want to talk about you, but might not be aware of you yet. A couple examples are community sites, bloggers, industry events, relevant non-profit events, or even local news paper reporters.
What you absolutely shouldn’t do is exchange links or buy links form a link farm. Promotional solutions that only require a monthly fee almost never work in the long run, because anyone and everyone can partake and you end up getting drowned out in the noise. What you need to do is something useful that is related to your product or service.