Search engines will follow internal links, guiding them to other pages that they may haven’t discovered.
They also use the text of that link (anchor text) to determine what that link is about.
Internal links are very useful in improving the authority of pages being linked to.
Number of internal links and quality of internal links both are used as a ranking signal.
Consider the rankings of Wikipedia.
Wikipedia shows up for any search terms on Google usually at number 3 or 4 positions.
It also occupies number #1 position for a lot of long tail keywords.
The number 1 reason for Wikipedia to be able to rank that high is internal links.
Wikipedia is perhaps the extreme enactment of internal linking.
Here is a page about SEO on Wikipedia. Note the number of internal links.
The best practices for internal links are
- Link internally and link often.
- Use the right anchor text for linking
- Color the link appropriately to denote the difference