Wikipedia describes Reciprocal Link as
"A reciprocal link is a mutual link between two objects, commonly between two websites in order to ensure mutual traffic."
What it means is, suppose 2 websites are there (name them siteA and siteB). You link siteB in siteA and siteA in siteB.
siteA -> siteB ->siteA
So you can say the websites are reciprocally linked.
You can submit to Reciprocal Link Directories to achieve higher Page Ranks.Reciprocal linking between websites became an important part of the search engine optimization process because of PageRank Algorithm of Google,which ranks websites for relevancy dependent on the number of links that led to a particular page and the anchor text of the link.
It may be discarded by search engines so more strategic steps can be taken like Three way linking.
Sites for reciprocal linking
Web ring
Reciprocal Lynx
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