A backlink is a link on someone else's website that points to yours. Search engines use links as a signal of trust and authority: a page that many relevant, reputable sites link to is more likely to rank.
Why it matters
Quality matters far more than quantity. One link from a respected site in your industry can outweigh hundreds from low-quality directories. Buying links or trading them in schemes breaks Google's spam policies and can get a site penalised.
Example
A coffee roaster featured in a food magazine's "best coffee subscriptions" roundup gets a backlink that brings both referral visitors and ranking power.
What to do
Earn links by being worth mentioning: publish useful content, pitch roundups you belong in, and reach out to journalists covering your topic with something genuinely newsworthy.