There are three types of links, even if they're all coded the same: a reciprocal link, an outbound link, and a one-way inbound link. In the past, people would join link exchange sites to get reciprocal links. Now, the newer algorithms actually discount reciprocal links in favor of one-way inbound links. The trick then isn't just to get an inbound link that will count as a backlink (since a reciprocal link would then qualify), but to get an inbound link that is one-way only.
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GOOD NEIGHBOR/BAD NEIGHBOR
To be clear, the algorithms used to determine good SERPs are not published. The information that is being presented is based on things that people tweaked and then used in a trial and error fashion to try to get good page ranking. If the algorithms were published, it would be a simple matter to fool the search engines and thus they would automatically lose their value.
So, the best way to understand the way the new algorithms work is to think of your site as a piece of real estate. On the Internet, you can buy a piece of real estate in cyberspace and it doesn't have an address until you have a domain name. This domain name is used to determine some of your page ranking and it also is important in identifying where you live and what you do.
However, even if we know that you live at www.myurl.com we still don't know anything else about you. We're thinking of doing business with you and maybe the sign on your door (your domain name) tells us what you sell, but it doesn't really tell us what kind of quality to expect from your business. The first thing we might do then, in this case, is to simply drive by your place of business and see what the neighborhood looks like and speaking to the neighbors.
In cyberspace, your neighbors are the people who backlink to you. Their PageRank is what the search engine already knows about your neighbors. The spider that crawls their sites begins to get an idea of who you are based on what your neighbors are saying about you on their web pages.
If they are quality people who are have something to do with the niche your business is in, then they are expected to be expert appraisers of your reputation. After they start talking about you, the way they promote you and what they say will determine whether we end up thinking your place of business is in a good neighborhood or whether you might be in a less desirable place of town.
THINK QUALITY, NOT VOLUME
Understanding this analogy, you begin to see that it isn't the number of neighbors you have, but the type of people you cultivate in your inner circle that makes the different. This can be confusing for new webmasters who think that they are given PageRank based on the number of links that come into their site.
That's really not correct. They attain a higher ranking based on the quality of the people they associate with and the neighborhood they frequent. So, a site with fewer backlinks can still beat one with a larger number of backlinks - if those links are the right type of link.
In a way, this can make your job easier. You don't have to fret about whether you have fifty or five hundred links, as long as you are getting links that are raising your reputation by default. Eventually, those people tell their friends and your reputation begins to grow - and, in the right neighborhood!
So take care when establishing backlinks. There is really no sense in wasting your time on getting links from sites that aren't popular.