Anchor text is the clickable link in a body of text, which leads to another page on or off the website. It is generally underlined and blue, but that only depends on the styling of the website.
Example:
<a href="http://www.example.com">Example Anchor Text</a>
<a> </a> are the opening and closing Link Tags respectively
href is the link referral location
Example Anchor Text is the clickable link
Anchor text is very useful in SEO. The anchor text should contain keywords that are related to our targeted search terms. In other words, our text should be keyword-rich if we want to increase our chances of improving our keyword rankings.
Source:
http://moz.com/learn/seo/anchor-text
http://dan-nolan.com/what-is-anchor-text/
http://blog.ahrefs.com/basic-guide-anchor-text/