Outbound Links
How you link out to other sites affects how Google trusts and ranks your site. In the TrustRank white papers that included a patent adopted by Google, they mention how good sites link to other good sites. They also say that "good sites seldom link to bad ones". Use this knowledge to enhance your rankings. Link out to authoritative and trusted sites. If you have a ton of links leading to spammy sites it's going to hurt how your site ranks. You can't control who links to you, but you CAN control who you link to, so don't harm your rankings by linking to bad sites.
As an example of this principle in effect, check out Huffington Post's homepage. Their articles rank very well in the search results and they have a PR 8 homepage. If you scroll to the bottom of their site, you will see a massive amount of "dofollow" links all leading to other major, authoritative sites. It's no coincidence that they rank well in the SERPs (search engine results pages). This is a clear example of a site benefiting from linking out to other good sites and gaining trust from Google.
Internal Links
Internal links are the links that lead from one page on our site to another. Now is a good time to state a quick fact about search engines and how they index the web. Search engines do not index websites, they index web pages. This means that a site doesn't have authority; rather a web page has authority. The reason all the pages rank well on an authoritative website is because of internal links.
When a large authority site makes a new page, what does that page have? It has a ton of powerful links from other authoritative pages already on the site. This all occurs because of internal linking. So what does it mean for us? It means we need to have a solid internal link-structure to take advantage of our own link juice.
There's no exact science to how you link your pages. Just having a consistent nav-bar is a start, but there is a lot more you can do. If you use Word Press, there are many different related posts plug-ins you can use that will automatically create links to other related posts for you. I recommend having more internal links than external links. A 1 to 3 ratio is a good reference for your outbound to internal links ratio.
There is a practice called PageRank sculpting that involves severely limiting the number of outbound links you have in order to keep more link juice internally. It sounds like a decent idea, but it fails in practice. PageRank moves more cyclically than recognized and a lot more will stay on your site naturally. Also, we just talked about how outbound links can help you rank - don't be afraid to link to other great sites.
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