I see huge differences in the no. of incoming website between link:mydomain.com and Google Webmaster Tool
That's right dude. link:domainname.com is not accurate. I use google webmaster tool to see backlinks for my sites. And yahoo site explorer to check backlinks for other sites.
The link: check in google shows a small portion of the links. I have 4,000 links in google webmaster tools but only 58 when I do the link: check.
Yeah, thats correct dude. Only Google webmaster tools shows you the actual links. Yahoo site explorer is also good. Checking through link command only shows lesser number.