The practice of getting inbound links to your website from other websites.
Link building is getting links from business listings, reaching out to bloggers, reviewers, journalists and other relevant websites.
Backlinks help improve the authority of your site, and can have a significant impact on how well you rank in organic search.
Note: For back linking to work effectively, you need content worth linking to. Having a thousand back links from local business registrars will have very little effect, but getting a reviewer or blogger to write about your product or services, linking directly to them, will help immensely.