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more specifically, in a link to your site as follows:
<a href="http://www.widgets.com">Blue Widgets</a><br>
The Best darn blue widgets this side of the mississippi!
Blue Widgets is the anchor text (between <a> and </a>
And as stated above, it is what tells google what your site is about, thus it helps in search result rankings that are for the keywords "Blue Widgets"