How anchor text works
Anchor text is the wording a reader can see and click. A person reads it as a promise about what lies on the other end, and a crawler reads it as a short description of the destination written by whoever placed the link. Where the link is an image rather than words, the alt text does the same job. Search engines also take account of the sentence the link sits in, so context is not wasted.
Anchors divide neatly by who controls them. Inside your own site every anchor is a decision you make. Outside it, almost none are: a journalist, a supplier or a customer writes what suits them, which is often the brand name, the page title or a bare address. That difference matters, because the spread of anchors pointing at a page is one of the signals used to judge whether its links were earned or arranged.
Why anchor text matters
For readers it is the whole basis of the decision to click. Someone scanning a long page reads the links before the prose, so a descriptive anchor saves them from opening a page that turns out to be the wrong one. People using a screen reader often move through a page link by link, and a list of identical vague anchors tells them nothing at all.
For search engines it is a description of a page written by someone other than its owner, which is why it carries weight. Inside the site it is also the cheapest instruction you can give: internal links with clear anchors quietly state what each page is for, and most sites leave that ability unused.
Common mistakes with anchor text
The dangerous one is forcing the same commercial phrase into every link you can influence on other sites. A page whose inbound anchors all read like an advertisement looks arranged rather than earned, and that pattern is among the most common causes of link-related trouble. Real citations are messy, and messy is what safe looks like.
Inside the site the failure runs the other way: vague anchors everywhere. Wording such as click here or read more wastes the one place you get to say what a page covers. Reusing one identical anchor for two different destinations is the other trap — you have told search engines that two of your pages want the same query, which is how one ends up suppressing the other.
Getting it right
Write the anchor as part of the sentence, not bolted onto it, and use the words someone would say out loud to describe the destination. Keep it short enough to scan and specific enough to act on. If the anchor would still make sense read aloud on its own, it is doing its job.
During any content review, crawl the site and export every internal link with its anchor. Look for pages with no descriptive inbound anchor at all, and for a single phrase pointing at several destinations. Off the site, tidy the anchors you genuinely control — profiles, directory entries, articles you contribute — and let everything else stay varied, which is the natural state of links earned from other websites.