I cant stress the importance of backlinks enough. They have given me a number of readers, and now my blog has around 80 UV on an average, and I even had 120 once. Actually, there is no stage when you should stop linking back. They improve your relations in the blog community and provide readers an oppurtunity to find your blog.
I wont write about it myself, because there is no need to. I learnt their use from "The Importance of Backlinks" on Bloggerlounge.
Here is an excerpt from the article:
Backlinks are links that are directed towards your website or blog. The number of backlinks is an indication of the popularity or importance of a blog. They are important for SEO because some search engines..(more)
Hope you learnt a great deal from that. Its one of the most important things, so make it a point to read that.
PS: Are you interested in backlinks from this blog? Tell me about a good article you wrote. Write a guest blog with a link to your own blog.