Blog Submission to blog submission directories will help you to popularize your blog and will bring in traffic if that blog provides useful information. Google spiders these blog directories and that is how if the blog is keyword rich it might rank in search engines for that particular keyword. So if you have a blog which is keyword rich then you may get ranking for that. Basically it supplements your website in terms of the content. Suppose if your website cannot take additional content then the blogs provide an additional support for that content. If you are updating blogs on a frequent basis then the spiders are fed with new fresh content on a regular basis. It works similar to the RSS feeds.
I think you're talking about submitting your blog to directories. To answer your question, it builds backlinks which you need to rank better.
people submit to blogs to get backlinks and traffic. one thing to watch out for is that some services claim offer submission to 900 blogs giving you 2700 links or even lot more. you should avoid service like that. most of the times al the blogs are hosted on a same IP and they accept just about any sites. too many links from same IP with unrelated content can harm your sites SEO campaign. but there are small blog networks with multile class C address. you can submit to those blogs under relavant category.
Yes It is an effective way of building backlinks pointing to your site, some thing similar result's that we achieve on directory submission.