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Reciprocal links are when site owners trade links on their websites for purposes of increasing traffic, making it easier for search engine spiders to find your site and, yes, increasing ranking on some search engines - notably Google.
You may notice a lot of sites have a 'links' page on them with information on how to trade a link with them.
If you want to find some examples, you can do a search in Google for 'trade links' 'reciprocal links' and similar terms. This should turn up a lot of sites' link pages.
There are some pitfalls with trading links - bad neighbourhoods, etc, so it would be worthwhile you having a good read-up here at WebmasterWorld in the reciprocal link and Google forums.