When I started in SEO, directory links were the easiest way for a SEO newbie with a new web site to get links. If it were not for web directories, I might have given up on SEO and webmastering completely.
Today, Google almost entirely discounts directory links. But, almost is not entirely. You can still get a bump from directory links.
Directory links are not the cornerstone of a successful SEO strategy, but they can be a useful component of a well-balanced strategy.
Index Links vs. Deep Links
Most web directories only offer links to your sites main page. Some web directories offer links directly to your content pages.
Unless you are still trying to rank for your site name, links to content pages are more valuable than links to your index page.
General Directories vs. Niche Directories
Google's discounting of directories has not been as hard on niche directories as it has been on general directories. Why? Because niche directories normally exercise more editorial control.
A link for your hotel site from ParisHotelDirectory shows more editorial value than a link from TheInternetIndex.
Also, of course, niche directories tend to be harder for Google to spot and penalize. There is a lot to be said for flying under Google's radar.
Some directory submission companies have looked at all of the work involved in submitting to huge number of free directories and have chosen to do business a bit differently.
They create a large number of directories that all share the same back-end for submissions. Then, when you pay the fee, they submit your site one time and it automatically shows up on hundreds of sites across the web.
Most people argue that these directory networks are the first to be penalized by Google.
Free Directories vs. Paid Directories
The relative value of free and paid directory listings is one of the never-ending arguments in the SEO community.
To my mind, it all comes down to cost. You can buy submissions to a thousand free directories for far less than the price of a single submission to BOTW.
I've submitted several sites to BOTW and didn't notice a bump in my SERPS from it. It's annoying to pay $249.95 for nothing.
But, if there is a paid directory in your niche, I would almost always recommend that you pay the fee.
DMOZ is a special case. It's run by the ODP, which stands for "Open Directory Project", but it's the least open directory on the web. DMOZ is run by a tight-knit cabal of Internet marketers who seldom update the site and always reject any submissions that compete with their own web sites.
But DMOZ is very old and was chosen by Google as the source for the Google Directory. In addition, many other sites also mirror DMOZ. Because of this, DMOZ links are believed to be very authoritative and powerful.
Personally, I have managed to get links approved by DMOZ many times over the years -- and have never seen a major boost as a result.
My advice is this: Submit to DMOZ, but don't wait to be approved. Submit it and forget it, or you will drive yourself crazy with annoyance.