This ranking measurement is sometimes called a site's significance ranking because it is believed that one measure of a site's "value" is the number of other Web sites who felt your site was sufficiently important to link to.
If lots of other sites link to your site, chances are your site is relatively important -- or so a good number of other Web site owners thought so. The popularity of the site that links to you can also play a role.
For instance, at least 315,990 Web sites link to the IBM (www.ibm.com) Web site in AltaVista's index (on January 21, 1998). In certain search engines, IBM would achieve better ranking with all other factors being equal. However, this is only one factor, and you can certainly achieve high rankings without being linked from thousands of sites. This is simply another reason why you want to get other sites to link to yours. Sometimes if you agree to link to them, they'll do the same for you. In Web marketing, this is called "cross-linking," sometimes called "reciprocal linking" and is another way to increase traffic to your web site.