Anchor text..what's the use of it..??

What is Anchor text?
An Anchor text is the visible text which is clickable in a hyperlink.For example,

"Blogger Tricks -Your online source for Blogger Templates"

In the above line,.. the Clickable text i.e, "Blogger Tricks" is the anchor text.
While Search engines crawl a webpage, the Anchor text tells them what that linked page is about.In the above example, the Search engines assume that the linked page is about blogger,blogging,tricks,tips,...related key words and it helps that webpage to rank higher for that respective keywords.

But, some people who don't know the importance of Anchor text do like this:

"Your online source for Blogger Templates - Click Here".

In the above case, the Search engines consider the linked page is about click,here,etc .. which are unrelated to your site... :(
So, if you understand the importance of it and use it cleverly, it will increase your search engine rankings very effectively.. especially in Google and it's very important if you want your website to be in top 10 for a particular keyword.

so.. How to do the Anchor text optimization?

Simple! always use the related keywords as Anchor text while linking to any webpage.
If you purchased any incoming links,make sure that one of your top keywords is in the anchor text.The more inbound links your get with that keywords, the more chances of your site will make it to top 10.These small things can make a huge difference :)