Lets use this example of anchor text:
You run a web design site, and that you want it to rank high with the search engines for the search term "web design". If you had 100 links pointing to your homepage, and the anchor text of all of them said "click here". This wouldn't tell the search engines a whole lot about your site. The search engines will not give you a good ranking.
However, if instead of "click here", the anchor text on those links said "web design", the search engines would easily conclude that your site is an authority on web design, and will give your site a high ranking.
Adding a bullet can give you yet another kick in position. "Web Design" Doing this you can add image alt tag to the link as well as anchor text.
Example of Anchor Text:
<a href="http://blog.activeservers.com/SEO/" title="Internet SEO Articles">Articles</a>