Linkage allows you to import objects from your library onto the stage at runtime. Basically, you give your library symbol a linkage identifier in the ‘Linkage…’ options in the library, which makes that symbol available to a function like MovieClip.attachMovie();
Think of it as a type of name tag. You use the linkage to give something in the library a ‘name tag’ like “ball”. Then you tell Flash to find “ball” in the library and attach it to the stage so you can use it, in the manner that Indie mentioned.