There are many factors that effects the outcome at search engine results page, but Link Popularity is one of the most important one (at least now a days).
To understand Link Popularity easily consider below example:
Suppose you are looking for a Web Development / Scripts directory and have
asked few of your friends to recommend some options. Lets say there are 10
friends that recommends Need Scripts (www.needscripts.com) while 2 other
recommends some other company. It is more likely that you will have already
positive view about our company and work, and if you were to make your
decision solely on recommendations then you are surely going to choose us as
your SEO Consultants.
Link Popularity works almost in same manner. From search engines point of view if other web sites are linking to your web site, then it is considered that they are in a way recommending your web site to their users and generally people tend to recommend their best experience. Search engines in their desire of producing best quality results in all aspects, do take into consideration the link recommendations (Link Popularity) and give web sites with higher link popularity a potential boost in search engine ranking.
So ranking web sites based on link popularity seems a wonderful way for search engines to rank websites, however there is a problem. Like cloaking, link popularity is also being misused by many web masters and is also considered questionable method. However, talking about present case scenario - Link Popularity makes a big difference and it is very important to improve link popularity of your web site in ethical manners.
One should never:
Link popularity is here to stay - and that is final truth. However, it is also very true that it is highly important that Link Popularity techniques are used only ethically - because link popularity work without proper study can also get your web site banned from search engines.