*NIX has two kinds of links: hard and soft. link creates a hard link, in which two separate directory entries point to the same inode on the disk (which also increments the link count on that inode). symlink creates a soft (or symbolic) link in which the directory entry contains the name of the target file.

Hard links are separate, redundant entries in the filesystem. When you unlink one of them, the other still points to the file (although the inode's link count is decremented) so the contents on disk are not removed; once you unlink all directory entries pointing to the inode in question it will be put back on the free list and made available for reuse. You can detect a hard link by using the -i option to ls to show the inode number in listings; two directory entries hardlinked to the same file show the same inode number.

Symbolic links are more like pointers by name to real files. Removing a symlink just removes the pointer entry in the directory. Removing the target leaves the pointer dangling and trying to access through it will fail.

Update: Here's an example which may clarify hard links. 

$ touch file1
$ ls -li file1
4210927 -rw-r--r--   1 fletch  wheel  0 Dec  8 11:15 file1
$ perl -e 'link( "file1" => "file2" ) or die "$!"'
$ ls -li
total 0
4210927 -rw-r--r--   2 fletch  wheel  0 Dec  8 11:15 file1
4210927 -rw-r--r--   2 fletch  wheel  0 Dec  8 11:15 file2
$ echo "Through file2" >> file2
$ ls -li
total 16
4210927 -rw-r--r--   2 fletch  wheel  14 Dec  8 11:15 file1
4210927 -rw-r--r--   2 fletch  wheel  14 Dec  8 11:15 file2
$ cat file1
Through file2
$ rm file1
$ cat file2
Through file2
$ ls -li
total 8
4210927 -rw-r--r--   1 fletch  wheel  14 Dec  8 11:15 file2

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Update: Minor wording change to try and make it clear that its the link count that's a property of the inode itself that gets decremented.

In reply to Re^2: (OT) Is there any difference "link" and "copy" functions by Fletch
in thread (OT) Is there any difference "link" and "copy" functions by Anonymous Monk

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