backlink is a link that points at your web site. Search engine treat links as votes (amongst other things) to determine how well to place your site in search results. Since search engine traffic is free and targeted there is no reason not to try to get it if you can.

PR is page rank, high pr sites have more pull with their links, so people might be willing to buy them if the results are worthwhile.

Backlinks are more about your
authority and trust with google then traffic.
But when you have a high trust with Google,
naturaly you will get more traffic.

Igor

Thanks for clearing this misconception, thanks. So basically backlinking is where people link to my site, and then the rankings of my site increases, am I right?

That is correct, in general.

One word of advice for "paid" links. Google is starting to crack down (devalue) links that are from "link-farms" and paid linking sites. Sure, they have to figure out if the site that is linking to yours is one of these, but when they do, the value of that link will go away.

Also a point to remember is that the the "value" of that link passed back to your site is divided by the total number of links on the linked from page. That is, it is of more value to you to have the only link on a page of a PR3 site than it is for you to have a link on a page of a PR8 site when that page has 20 other links on it. In the first case, you get the total value of the PR3. In the second case, you get PR8 divided by 20.

It is generally of more value to you in the long run to develop your own backlinks via traditional methods (article marketing, blog/forum posting, etc.) than it is to pay for backlinks.