Web directories are gigantic bookmark lists, just like our regular Telephone Directory, organized into logical categories and subdivided into hundreds of sub-categories, sub-sub-categories, and so on... The advantage of the directories is that the sites listed are usually of a higher quality, because sites are selected by humans, so it is not as easy to "get in" as it is in case of search engines.

The major web directories like Yahoo! and Open Directory are great traffic sources. Apart from this, many search engines use them to supplement their search results.

When you submit your site to a web directory, your site is queued for review by a site editor. That means, a human being actually visits your site and determines whether or not it should be included in their index. Therefore, it is important to realize that most of the techniques you use to optimize pages for spider search engines will not work for web directories.

Site editors verify that the category you selected is appropriate, that the title and description are accurate and relevant to the content of your site. In addition, each web directory has its own criteria for evaluating sites.

Here are a few general tips to help you evaluate your web site before you submit...

• You should have your own domain name.
• Your site's name should match your domain name.
• Make sure there are no bad links, broken images, or JavaScript errors.
• Display your company's contact information in plain view.
• You should have secure ordering (if applicable).
• Include links to your company's privacy policy, return policy, guarantee, etc.

Source:
http://www.buildwebsite4u.com/promotion/directories.shtml
http://www.seopedia.org/