A link chain is basically an open link wheel used within a pyramid structure to reinforce the power of each site within the pyramid.
By adding 2 links to a site instead of just 1 we can build a link chain that is very effective. 1 link points to the tier above and another link points a different site at the same tier level.
This is really only truly effective when it is used in articles and posts that are relevant to each other. For example if you had a site that was trying to rank for the keyword “how to lose weight fast” and all your articles, Web 2.0 sites and blog posts where weight loss related then a link chain would be very effective.
As each site is related to the same topic each link is relevant to the site it is linking to generating a lot of relevant link juice which all makes its way upstream to your main money site.