"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. 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 pages that casts the vote. Votes cast by pages that are themselves 'important' weigh more heavily and help to make other pages 'important'."
PageRank (from here on I will refer to it as PR) works on a scale from 0 - 10, with 0 being lowest and 10 being highest. The higher your PR is, the more authoritative your site is.
Each website that links to you will give you some of their PR (if they have any) and vice versa. A great analogy is that PR is like water. The higher the PR of the website that links to you, the more water that they will give you. It's important to remember though that if that webpage is already giving water (linking) to lots of other sites, they will not give you as much as they would if they weren't linking to so many sites.
Most websites have the highest PR on their homepage because that's where the majority of their incoming links point to. A common theme is that a website will have a high PR on their homepage, but low or no PR on most of their internal pages.
It is important to have "deep links", these are links going to a page in your site other than your homepage
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