How important are inbound links?

Over the past 2 years or so, search engines have placed a lot of importance on inbound links. Inbound links are a good way to judge the popularity of a website i.e. the more inbound links a website has, the more important it is considered to be. Many people use words that describe a website in order to link to it, so the words used to the link have become very important. Ideally, all of the inbound links to your website should use your target keywords as the link text.