What is Anchor Text?

What is Anchor Text?
I am keen to know about anchor text. What is it and how is it used? Is it an integral aspect of SEO? Someone said it is a combination of several keywords. Is it so? How does it impact your search engine ranking? Can someone please reply to all these questions? They have been on my mind for a long time now. I guess this forum is the right place to have my queries answered. I am new to SEO and I have a long way to go! However, I am willing to do whatever it takes to learn.
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Digital Marketing Agency|SEO UK