It's always good tho know a little about history. If you know the beginnings and the evolution of something, you will save some time and avoid mistakes. The same is true of the "Link Wheel". This is the most concise explanation of what I have researched online. Link wheels are similar to, sometimes described as, and maybe in some ways, can be the same thing as Dynamic Linking (get the book, it's free) and what is called Page Rank and Link Sculpting. Generally speaking though, for our purposes we are not too concerned about things like leaking Page Rank (maybe a bit too complicated for our simple link wheels).
The idea behind a link wheel is not new, but the definition, size, and scope for the use of link wheels is always in a state of flux. The basic concept has always been to control a link scheme of interlocking website properties to boost the ranking of a particular website. In the early days this would mean building self-hosted websites to create these links. You can see how that would be time consuming and not very cost effective. This also is referred to as sculpting your own links, and dynamic linking would be part of the overall goal.
As free blogging platforms, special interest forums, and social networking sites have evolved, it was only a matter of time before savvy marketers discovered they could use these as the spokes for more efficient and more powerful link wheels. My best guess from what I have read is that link wheels have been around for at least 10 years...maybe longer.
"This was back before the whole web 2.0 thing, or the interactive web that we have today. It was back before blogs and social bookmarking. Back before there was an abundance of free websites and hosting like Squidoo, MySpace and Facebook. Long before free video hosting like YouTube, MetaCafe and uStream." See "History & Evolution of the Link Wheel or Mini Net & the Internet" for a good one page explanation.
Today all we have to do is substitute free hosting services like Hubpages, Myspace, and Blogger. Site building software is also not necessary, as we can use free tools like Wordpress to build unlimited pages at no cost, more efficiently and more quickly.
Do a quick "image" search on Google for Link Wheel and you will probably be astounded at the size and complexity of some link wheels. The purpose of my posts here are to show you that all that work is not necessary. Combining the right elements of micro-blogs and RSS feeds will accomplish fantastic results.