I hate “click here” and actively avoid using it, but unfortunately clients seem to love it and often request it specifically. The problem is this: intuitively it makes a lot of sense from a non-tech user interface angle — the average user wants a flashing button that says THIS WAY, a link clearly labelled HERE, etc. It’s the difference between the door itself and a sign on the door… Clients want to be sure their clients don’t miss the gateway, and many users don’t want to have to take the time to figure out how to navigate.

Another problem is that browser issues or poor web design could potentially conceal a link that is not clearly marked. Look at a sample post from Design Observer:
http://www.designobserver.com/archives/020193.html

This site, considered the leading and elite design website in the US (for better or for worse), recently redesigned. In doing so, they chose a palette that many users (including myself) feel is far too subtle. The links, buried within the paragraphs, are barely distinguishable from the maintext and are often missed. They could have improved things by simply making links bold or having a brighter color appear on rollover, but they are concerned only with looks, not useability. Frankly, I consider this irresponsible design… but don’t get me started on my frustrations with DO. At any rate, I’m not suggesting that DO employ the “click here” tactic, but they are an example of how the opposite of “click here” is sometimes not a better solution.

If you are going to include your links within text, it needs to be very clear to the user that they are links — things need to be obvious, clearly marked, and easily interpreted by the site visitor. Seems like common sense, and yet…