Back Links Are Considered Popularity Votes - All the major search engines including Google and Bing consider ethical backlinks as a popularity vote.
Google in particular, calculates the importance of a page by the number of such 'votes' it receives. Not only that, Google also assesses the importance of the pages that are involved in the voting process.
Consequently, pages that are themselves ahead in ranking and are important in that way, also help to make other pages important.
One thing to note here is that Google’s technology does not involve human intervention in anyway and uses the inherent intelligence of its algorithms to determine the ranking and importance of any page.
Unlike some its conventional counterparts, Google is a search engine which is hypertext-based. This means that it analyzes all the content on each web page and factors in fonts, subdivisions, and the exact positions of all terms on the page.
Not only that, Google also evaluates the content of its nearest web pages. This policy of not disregarding any subject matter pays off in the end and enables Google to return results that are closest to user queries.
Google has a very simple 3-step procedure in handling a query submitted in its search box:
When the query is submitted the web server sends the query to the index servers. The Index Server is exactly what its name suggests, it consists of an index.
Much like the index of a book which displays where the particular page containing the search term is located in the entire book.
After this, the query proceeds to the doc servers, and these servers actually retrieve the stored documents. Page descriptions or 'snippets' are then generated to describe each search result.
These results are then returned to the user in less than one second! (Normally.)
Every so often, Google updates their index by recalculating the PageRanks of each of the web pages that they have crawled.