Colin explains Alt and Anchor text and how they are used by search engines.
Alt text and anchor text are both important parts of your website to help with your overall search engine rank. Alt text is an alternative bit of information for an image or multi media part of your site. They should usually have key words or short description but not so much that your key word stuffing. Typically the alt text is how search engines can actually identify your items such as Google image search. It also adds to the overall value of your webpage.
Anchor text is the wording used for the internal and external links on your website. Using descriptive anchor text will help users find the information they’re looking for efficiently. The quicker a user can move through your website and get to the information you’re looking for the happier they are and the more likely they will be to convert. Good anchor text also helps Google to categorize your information. For instance if you’re using anchor text of click here versus say read more about XYZ gears, then Googles going to have a better idea of what to do with that and your page is likely going to rank higher.