This depends on the nature of your project (and on who you ask). The following methods link building strategies exist.

Whitehat: works for all kinds of sites and projects. Want to rank for akeyowrd/subject area? Provide relevant content that is by far the best on the Web, and people will link to you.

If you are in a relatively uncompetitive niche, or if you are targeting a handful of uncompetitive longtail keywords (which in some cases is a good idea), you may gain some such results by pursuing low-quality free links such as can be had from blog comments, forum posts, forum profiles, article submissions, PR marketing and free directories. For improved results you may build a further tier of links to the pages that link to your site.

If you want to play in a moderately or highly competitive keyword market and/or want to target a medium to large group of keywords across the board, you are best off getting high-quality, relevant contextual links from private sites. IMHO this is by far the most effective approach to link building, but the inherent difficulty is finding access to such links (which is what keeps SEO professionals in business).

If you are running an affiiliate or trashy / temporary site or MFA site, there is the option of automated link building. One problem with this approach is that it pollutes the Web with lots of spam and contributes to global warming (no joke). Another aspect is that using such links may not be entirely safe for your site in the long run.

I hope this helps!

This definitely helps a ton. Thanks for the info.

High quality links are still the most important thing. As Philip says, the problem is getting them. The solution? There are many quality blogs that accept guest posts. You will have to submit original content that's high-quality and not cross-posted or duplicated. If you read a lot of blogs, many have a "write for us" link or something like that now.