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I have heard that if you have a lot of links on your website, it will help you get more traffic. But I don't understand how this is so, unless you get a lot of reciprocal links from those sites. Does it have something to do with how the search engines react to a site with outgoing lots of links? Can anyone help me understand this? Thanks!
a lot of links on your website
Limited numbers of pertinent outbound links help you to be seen as an authority (it's quality, not quantity). G and the others see the net in clusters and focii. If your site attracts pertinent links (without recips, unless it happens naturally), and you link to sites that are the best in your field (with no recips, unless it happens naturally), then there is no spammy pattern and your site shows up as a bright little star in the cluster. SE's will like that and treat you well.
In many cases, that something may be a succinct summary of other places to go.
A site that is a dead end is of little interest to anyone.
Consider a comparison with highways. What gets more traffic: an interstate with many exits, or a dead end up a track?