Link building simply refers to an issue known as relevancy. When ranking sites in search engine results, Google tends to list the site that is the most relevant. There are a lot of factors that go into determining relevancy, but the number of other sites linking to yours is one of them. This is why a site like the one for the IRS is high in search results for tax issues even though it does not trade links per site.
Ideally, you want only inbound links from other sites that are relevant to the subject of your site. If you have a plumbing site, you want links from other plumbing or home improvement sites. Despite all the junk email you receive, links from casino and pharmacy sites are not going to help the rankings for your plumbing site. They will hurt the rankings because they are not relevant.
When building links to your site, Google favors a slow, steady increase in links. If you want top rankings on Google, you should follow this mantra with one exception. If you have a new site, you need not be a slave to this approach.
As you probably know, new sites are not ranked by Google. Instead, your site will sit for six months or so in the much discussed Google sandbox. Given this fact, you really don’t need to worry about Google for the same period of time when it comes to your links. Google isn’t going to rank you anyway, so picking up the pace isn’t really a problem.
With a brand new site, I prefer to create as many legitimate, relevant links as possible as soon as possible. The reason is I find it beneficial to start aging the links as soon as possible. Links to your site tend to grow in value the longer they exist on another site. From my point of view, why not maximize the number as quickly as possible? It isn’t like it is going to hurt your rankings on Google. You aren’t going to have any!
In taking this approach, I am not suggesting that you purchase links, use link farms or so on. I am just suggesting that you maximize your link trading efforts immediately to build up as many links as possible and get the aging process rolling. As you approach month four in the sandbox, you can start scaling back your efforts to a more slow and steady approach. Its worked for me.