I read somewhere in webmaster SE, that link structure is good when done in a typical hierarchical structure.
I want to know what does it mean. Please explain me. I am more of a visual person.
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There is a method known as the theme pyramid. It is simple in concept. So I will keep my answer simple too.
Create a plan of sorts. You would identify your most important topics. Then sub-topics of the topic, then sub-topics of the subtopic. For example, Kitchen Supplies; Utensils, Pans, Appliances; then under pans; Frying, Sauce, Baking.
You would link from your home page, the most important topics higher up in the HTML code preferably in your navigation, then from that page, link to it's sub-topics, then from that page, link to it's subtopics.
While this is fine and dandy, it may not always be possible to do this exactly. But here is what you are doing: signalling to the search engine what are your most important pages/topics and what sub-topics belong to a topic, and how important that sub-topic is.
It is better to use a more flat structure with fewer hierarchical levels. I would not generally go beyond 2 or 3. Any more than that, then you run the risk of the pages not ranking as well.
I do want to mention that there are other linking methods that we are all familiar with and would recognize. The theme pyramid has limitations in that it does not apply for all sites such as blogs. But for old-school traditional sites, this is the linking scheme of choice at least to begin with.
I use this method.
As far as navigation is concerned, the header navigation is seen as most important, sidebar less important, and the footer, far less important. These are the three link areas that search engines recognize as navigational. You can replicate a link found in the header navigation in the footer, this is tolerated, but not in the sidebar.
Every page should be found using some form of navigation. Having said that, the most powerful link you can make is a conversational link within content. While the first link to any resource found on a page is often used, any link that is conversational and within content is noticed and has a higher priority if it adds value to the identity of the link. But do not over do this. Do link from content your most important topics if they are related and complementary. Do create create cross-links from pages. But do this for humans. Search engines will reward you for this. You can also at the end of your content link to another similar page as well as use the sidebar for popular pages.