Anchor text is the visible text for the link. As an example, let’s a link to the page on my blog is:
Upwork SEO Proposal Template
You can see the link text as Upwork SEO Proposal Template. The linked URL is https://biztips.co/write-seo-proposal.html.
So anchor text in the above link is Upwork SEO Proposal Template.
Anchor text is relevant because Google uses the backlinks anchor text to determine the relevancy factor of the landing page for a keyword.
In other words, because I linked this article (https://biztips.co/write-seo-proposal.html) with an anchor text as Upwork SEO Proposal Template, the relevancy of the page for the keyword increased.