Broken links are links that do not work, either because they
have been miscoded or because the pages they point to don't exist perhaps it
has been moved.
It's quite important to a search engine that none of the links
on your site are broken. It shouldn't be that big a problem to go through your
site and check to make sure each link works manually. Doing this will also give
you a chance to review your site systematically, and understand the navigation
flow from the viewpoint of a bot.
Even though you've checked your links manually, you should also
use an automated link-checking tool. Quite a few are available. A good choice is
the simple (and free) link checker provided by the World Wide Web Consortium W3C at http://validator.w3.org/checklink. All you need to do is enter
the domain you want checked and watch the results as the links in your site are
crawled.
Inbound links are considered a shorthand way of determining the
value of your web site, because other sites have decided your site has content
worth linking to. An inbound link from a site that is itself highly valued is
worth more than an inbound link from a low-value site, for obvious reasons.
