What do you mean by anchor text?

Anchor text is the clickable text in a hyperlink. SEO best practices dictate that anchor text be relevant to the page you're linking to, rather than generic text. The blue, underlined anchor text is the most common as it is the web standard, although it is possible to change the color and underlining through html code.
 
Anchor text are those text which are clickable as link in inserted in it and when a visitor click on it it is redirected to that webpage. Generally keywords are used as anchor text, it is only done to increase the visitors to your site.
 
Best example of Anchor text is as follows

Reliable web hosting

In above example "Reliable web hosting" is called keyword and link ktchost .com is called as hyperlink and combination of both is call Anchor text
 
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