What is Google Page Rank ?
PR, or Page Rank, is a number assigned by Google which represents to relative importance of a web page. The PR for a web page can vary between 0 and 10.
PageRank is one of the methods Google uses to determine a page’s relevance or importance PageRank is also displayed on the toolbar of your browser if you’ve installed the Google toolbar (http://toolbar.google.com/). But the Toolbar PageRank only goes from 0 – 10 and seems to be something like a logarithmic scale:
“PageRank relies on the uniquely democratic nature of the web by using its vast link structure as an indicator of an individual page's value. In essence, Google interprets a link from page A to page B as a vote, by page A, for page B. But, Google looks at more than the sheer volume of votes, or links a page receives; it also analyzes the page that casts the vote. Votes cast by pages that are themselves "important" weigh more heavily and help to make other pages "important".”
A higher PR number will help you to score better in your SERPS, which will bring more visitors to your web page.
Google figures that when one page links to another page, it is effectively casting a vote for the other page. The more votes that are cast for a page, the more important the page must be. Also, the importance of the page that is casting the vote determines how important the vote itself is. Google calculates a page's importance from the votes cast for it. How important each vote is is taken into account when a page's PageRank is calculated.
It matters because it is one of the factors that determines a page's ranking in the search results. It isn't the only factor that Google uses to rank pages, but it is an important one.
Not all links are counted by Google. For instance, they filter out links from known link farms. Some links can cause a site to be penalized by Google. They rightly figure that webmasters cannot control which sites link to their sites, but they can control which sites they link out to. For this reason, links into a site cannot harm the site, but links from a site can be harmful if they link to penalized sites. So be careful which sites you link to. If a site has PR0, it is usually a penalty, and it would be unwise to link to it.
Note : No one outside of a small group of Google employees really understands the Google PR algorithm.
Google Directory Page Rank
The Google Directory PageRank is an 8-unit measurement. These values can be viewed in the Google Directory. Unlike the Google Toolbar which shows the PageRank value by a mouseover of the greenbar, the Google Directory does not show the PageRank as a numeric value but only as a green bar.
An excellent article on interpreting that bar is The Handy Dandy Google Page Rank Figurin' Guide.