What is link anchor text?

I've recently began reading a couple of webmaster forums and I keep seeing people refer to "link anchor text". Can you tell me what it is so I won't feel like I'm in the dark?
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We're all pretty aware these days that having links from quality sites pointing into your own site is a very important factor in gaining good rankings on some of the major engines.The other point that has become increasingly important is that relevant anchor text should be used in links. This applies not just to external links pointing into your site, but internal linkages throughout your web site.