is called 'reciprocal linking', and it's way by which two sites can try to boost each other's traffic.
I have a site that deals with how to grow orchids. You have a site from which you want to sell orchids. It makes good sense to try to get the people who visit my site (people who obviously like orchids) to visit your site, so they might buy your orchids. You therefore email me, and suggest that we link to each other's sites. I agree, so we exchange site addresses, and we each put a hyperlink on our site, with a few words of explanation "Now you know how to grow Ludisia Discolor, why not buy one? Click here" - your site would link to mine "If you're worried that you might not be able to look after your new orchid click here". With luck we'll both get some of each others' visitors - it's a win/win situation.
It's good Internet etiquette to ask the other site's webmaster for permission to link before you do it, and always link to the homepage - never directly to an 'inside' page, unless the other webmaster asks you to.
If you have a logo you can send it to the other webmaster and ask him/her to use it as the hyperlink.
Reciprocal linking, if carefully and properly done can build traffic figures remarkably quickly, but don't go mad and link to dozens of sites. Choose carefully, and only go for sites which complement yours in some way.