Whats the purpose of a linklist?

[tonya]

I was told to launch a linklist but I was curious what the purpose of one was? I think I know but im not for sure so I thought id ask here. My reasoning would be that you would place other peoples websites for free and they would place a link/banner on there website and you would also add your affiliate websites on your linklist to direct traffic to your affiliate content and also SE hits is this correct? Thanks in advance to whomever replies