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What is a typical hierarchical structure with related to internal link building?

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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SEO and multiple simple websites [duplicate]

From a SEO point of view, which one is "better" for a not so little company: Having one huge site containing everything regarding the company or having multiple one? I think one site is better, ...