There are two generally recognized types of SEO: On-page and off-page. Link building is typically considered off-page SEO. And it’s a very important aspect of SEO at that.
Google started counting back links to websites back in 1998 when it became the major competitor to Alta Vista, recognized as the leading search engine at the time. It was a revolutionary way to consider a website’s authority but the thinking was that if a website linked to another website then it was considered a vote of quality. After all, no one would link to a site they didn’t think was worth visiting or recommending. Therefore, Google introduced the idea of inbound links as a measure of quality.
Since then, link building has grown into its own industry. Google has taken the link valuation standard to new levels by introducing the idea of anchor text value, domain age value, relevance, and several other factors as well. Where before, link measure was largely a process of counting the number of links, it has since become a process of measuring the quality of links. It is the combination link quality and link quantity that determines, to a large degree, the effectiveness of your off-page SEO campaigns.
Link building is important because without it you may not be able to achieve the best rankings for your targeted keywords. But you may also not be able to maintain those rankings. Links are still considered a measure of authority by most of the major search engines. Until that changes, link building will be an essential part of your SEO strategy.