Anchor text is an important part of the search engine optimization fine tuning that you should do in developing your website content. The search engines not only look at the number of internal links you have on your site, but also what the text in your links say. They are primarily looking for relevance.
This is true whether we are talking about internal links or inbound links. Link relevance is important and anchor text plays a part in that relevance formula.
But what is “anchor text”? Anchor text is the key phrase that you use to link from one page to another. For instance, if you link from Page A to Page B using the key phrase “milk biscuits” then “milk biscuits” is your anchor text.
What makes anchor text important is the content on the page being linked to. Is it about milk biscuits? If not then you just have a link. But if it is then that anchor text can prove to be extremely valuable. The problem is, most decent SEOs know this and Google knows they know this. So to prevent spam from overly influencing its index, Google has decided to place a limit on the amount of anchor text that you can have from one page to another.
This doesn’t affect inbound links to one page from all sources. In other words, if you 1,000 links pointing to your milk biscuits page using the anchor text “milk biscuits” and all of those 1,000 links are form unique pages, those are good anchor text links. But if you have five links using the same anchor text pointing to the same web page from the same web page then you are only going to have one of those links counted. Google won’t count them all. It’s a spam-combatting measure that has been implemented by Google and it works.