This is the Google definition of PageRank:
PageRank relies on the uniquely democratic nature of the web by using its vast link structure as an indicator of an individual page's value. In essence, Google interprets a link from page A to page B as a vote, by page A, for page B. But, Google looks at more than the sheer volume of votes, or links a page receives; it also analyzes the page that casts the vote. Votes cast by pages that are themselves "important" weigh more heavily and help to make other pages "important".
Basically having more hyperlinks makes a page more important in Google's eyes. Incoming links from important pages count for more than links from less important pages. In a simple sense, if two web pages contain the words "Red Bananas" and a user searches for Red Bananas on Google, the page with the higher rank will appear first in the search results.
However, things are not quite this simple. If things were this simple, there would web pages stuffed with multiple links to other pages in an attempt to improve placings in search
results on Google.
Apart from Google itself, no-one knows how PageRank is calculated. Google now say that their ranking algorithms are more sophistacted than in years past and the content of pages is now more important than previously. However Google still assign and publish pageranks for websites 3 or 4 times a year so Pagerank must still have some relevance.
These factors are likely to affect the importance or weight passed by a hyperlink.
Multiple links from one page are devalued, i.e. the second link probably counts for less than the first link.
- Site-wide links are devalued, e.g. a link from every page in a 10 page website probably counts for less than links from 10 pageson separate websites.
- Reciprocal links are devalued. Many people now consider these worthless. This gets around the mutual voting scenario.
- A link from a page containing unrelated content counts for less, e.g. a link from a page talking about holidays to a page talking about nuclear physics, counts for less than a link from a page on another site talking about holidays.
- A link needs to say why it links to another page to give more credit, i.e. the link text needs to be appropriate to the topic of the page being linked.