What a great infographic provided by linkbuilding.nl! (Sometimes I wish we thought of this stuff). This is a perfect way to explain the different values of the links you are building to your site. Search engines want to see that you have a diverse amount of links that look as natural as possible. This is why you see penalties for purchasing links. You could also get penalized if you seem to be acquiring links too quickly; of course, Google is smart enough to distinguish between a successful press release that gets you coverage on hundreds of blogs and news sites in a few days, versus 300 new links from a perceived link farm. Click on the image for a larger version you can read.