Hi Ravi,
The concept is simple. Why Google gives importance to backlinks is simple - When our close friend refer or recommend someone, we will try to know more about this someone and then use him one day.
In the similar way above, Google have set its algorithm in this way, Google gets friends (Authority sites) frequently and when this friends recommend or refer a website (that is you), Google gives some importance to that. When the recommendations increase , Google will index you better and also give better Pagerank* - that is how the concept work...
Today the Google algorithm have been revamped with advanced AI to analyze backlinks to a website and figure out whether is viable or not.
So it is recommended to have backlinks from relevant site to your niche audience and also backlinks from authority site, like facebook, twitter, directories, Press Releases, etc...
*Pagerank : It is given on the bases of lot of factors like backlink relevance, traffic, frequency of update, etc...
Oct 5, 2010