Thematic Links

There has been said a lot about the value of themed links for link exchange. They bring value to a website and raise it in search results. However, from a linguistic point of view, what could be considered a themed (relevant) link? Search engines are not people. They can't say that if you sell real estate and have backlinks from mortgage websites, that you receive relevant backlinks? To search engines, relevancy is something that has a common part of a word that has a common root. Isn't that true? If this is true, than we have to exchange links with our direct competitors to get the most benefit. However, at this point we are seduced to cheat on each other and dump each other. Isn't that so? Who can tell me how thematic backlink is thematic. Thanks!