The text that people use to link to you. For example, "potato" would be the anchor text in this link: <a href="http://www.site.com">potato</a>
Anchor text is the visible text in a hyperlink. Anchor text is weighted (ranked) highly in search engine algorithms, because the linked text is usually relevant to the landing page. The objective of search engines is to provide highly relevant search results; this is where anchor text helps, as the tendency is, more often than not, to hyperlink words relevant to the landing page.
OK so taking keywords in my text and hyperlinking them to other pages is anchor text. Please confirm if this is right.