Originally Posted by arckane
a symlink is the equiv to a shortcut.
...only better. At least symlinks work reliably and for the most part transparently; that is, so that you can really access and manipulate the file through its symlink as if it were actually in the symlink's location. I don't think I've ever seen a Windows shortcut that you could do anything useful with.
As for the OP's question, a symlink is just that, a link that lets you access a file from a location other than the one it physically resides in. It's the kind of thing that has a multitude of uses, such as "collecting" a bunch of separate files into one directory without actually moving them from the original location, or giving a file with a hard-to-type name one that's easier to use, again without messing with the original.
A good use of symlinks can be found in the /dev directory. Your disk drive devices might all be labled /dev/hda, /dev/hdb, dev/hdc, and so on, without anything to differentiate them. But you can use udev rules to create symlinks such as /dev/cdrom, /dev/dvd-r, /dev/mainhdd, and so on, so that you can always access the drive you want without confusion.