Why do people back link to squidoo page? I understand it will give your link more juice, but wouldn't back linking directly to your site give your link way more juice than to just the squidoo page?
Not necessarily. When you have to decide whether or not to link to your site or a Squidoo lens, it comes down to which URL has a better chance of ranking well in the search engines. Depending on your keywords and the niche, the winner could very well be the Squidoo lens. Small niches and keywords with low competition, backlink to the site. For everything else, unless you have the ability to get A LOT of backlinks, link to the lens.
Ok thanks, btw how would operating a lens work? I would post my link in the description and post articles about my squidoos anchor text? wouldnt this equal to a much less conversion rate to my main site though?
To see how Squidoo lenses work, just visit Squidoo.com and poke around! However, to learn WHY Squidoo lenses work for webmasters, visit http://www.squidoo.com/crash-course-lens. Squidoo lenses are essentially web pages created by you on whatever you wish. Many people use them to funnel pre-qualified traffic to their sites for the very purpose of conversion. If you optimize them properly for keyword phrases that people are searching for, when they find the lens, they will have an opportunity to take action by clicking through to your site(s). Your lens needs to be effective in leading people to the next step; that's the challenge. The right kind of content, media, and images will encourage qualified buyers/clients/visitors to click through to your site and get what they were looking for. Creating effective Squidoo lenses is an art, but with the right study and commitment, it can really pay off
It really depends if you think it is worth it. If it seems like your spamming, I suggest not. Do a mixture of both.