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The most important thing you must understand when working with link popularity is that every page is treated as a separate entity. What this means is that internal links, that is links between the pages of your site, do count. In fact search engines make no distinction between those links and links from other outside pages. This is something that many people get hung up on, they do not understand why search engines would count internal links. What they don't realize is that there is really no way to tell if a link is from an internal or external page, since some sites span multiple domains and multiple sites can exist on one domain.
Another issue that some people get hung up on is that they think that reciprocal links can hurt you, meaning if you link to a page that links to you then those links won't count. This is also not true for somewhat the same reasons mentioned above. The search engines have no way of tracking this because the path of a link might lead off your site and then go to two other pages before there is a link back to your site. Imagine looking for such "link loops" on a billion interconnected pages. It's simply not technologically feasible to do, so the fair thing to do is to simply count all links, which is what search engines do.
Now link popularity is not a purely quantitative measurement. Instead the quality of links often counts more than the sheer number of links. Quality plays a role in two different ways. The first is that the context of your link is important. If you want to rank high on certain keywords then you need the pages that link to you to be related to those keywords. If the pages linking to you are not related to your site's keywords then they will do little to raise your ranking for those keywords. Also, more specifically, the text directly surrounding your link, or the text within the link itself, as well as any nearby headers or the page title can all influence what the search engine sees as the context of your link. Since people will link to you using your domain name or site title, having keywords in them, and thus in your link text, can help with link popularity in this manner. In fact having people link to you using your keywords is extremely important and beneficial, and of course using keywords in your own internal links helps as well. For instance it is common to link to your home page using the word "Home." Don't do this, instead use your keywords in the link. Sure it may look a little funny but the benefit will be immense.
The second way quality matters, is that pages that rank high themselves carry more influence than those with low ranks. So getting an inbound link from a very popular site can help more than one from an unpopular site. Also how much benefit you gain from a link is dependent on how many other links are on that page. So being the only link on a page will garner more benefit than being one of one hundred links. We like to compare this to sharing a pizza. If you have a pizza and share it with 2 people, each person will get more than if you shared it with 10 people. Also if the pizza is larger to begin with everyone will get more. So you'll get a larger benefit from being linked to a page with a high rank and few links than from a page with a low rank and many links.
This brings me to another important issue. Many people operate under the impression that being in link farms, or FFA (Free-For-All Link Sites), which are basically pages filled with hundreds or thousands or unrelated off topic links, can hurt their ranking or get them banned. This is not true for two reasons. The first is an ethical reason, since a webmaster has no control over who links to them, no inbound link will ever penalize you. The second reason is that it is simply unnecessary to penalize people for doing this. A link farm will not have much weight to begin with, and since the rank is diluted by such large numbers, the benefit gained from such a link will be almost unnoticeable. Though I have read stories of people who went up one whole Google PageRank by getting such a link, this is more likely because they were on the extreme borderline before and that one rather weak link pushed them over. So while getting a large amount of incoming links is important, the weight and context of these links are what will a makes a difference in your ranking.
The final thing you must know about how link popularity works has to do with redirects. Depending on the type of redirection used search engines will not assign any rank to the resulting page. So if people link to you using a long complicated affiliate URL, or vice versa, those links will not count. For the most part link popularity is tied to the URL, so to build a high link popularity you need all the links pointing to this same URL, not any variation or mirror of it. If you want to maintain search engine rankings you should try using a "301 Redirect." This type of redirect sends a special HTTP header to the client that should tell the search engines to apply the weight to the resulting page.
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