A web directory in it's simplest form can be thought of as a human indexed search engine. Humans can visit a directory website and make resource suggestions through an online form. A human editor will review the suggestion and add it to the directory provided it meets the submission guidelines for the directory.
General vs Niche Directories
There are two major types of web directories on the internet, general and niche. A general web directory will have it's resources sorted into a large number of categories covering a wide range of topics. Niche web directories tend to focus on one subject with resources sorted into a smaller number of highly related categories.
Purpose of Web Directories
The major purpose of a web directory is to provide directory users with a categorized list of high quality websites from a chosen field or industry. With the advent of search engines as the preferred method for finding internet resources the importance of directories as information provider's has diminished. But, as search engine technology and the field of search engine optimization have evolved, a new use for web directories has materialized.
Directories and Link Popularity
Current search engine ranking algorithms place a huge importance on back links to a website as an indicator of it's importance on the internet (known as link popularity). Search engine's value links to websites from web directories because these directories have human editors. Having your website listed in a respected web directory is an indicator to the search engines that your website has met a certain standard for quality and is a site worth linking to.
Search engine's also tend to serve up category pages from trusted web directories near the top of their search results so having your website listed in as many high quality web directories as you can should be part of any website marketing plan, especially when your website is new.
Getting your website listed in a web directory is also an excellent way to build high quality, search engine friendly back links to your website and gain targeted web traffic from both directory users and the boost to your search engine rankings from the increased link popularity of your website.
Please note, it is worth taking the time to carefully review a directory prior to making a submission. Not all directories are search engine friendly or provide traffic to their listings so it is up to the submitter to gather as much information about the web directory submission guidelines, linking structure and reputation prior to submitting a resource for inclusion.