As you know we have two type of links in our xhtml document one is absolute links and other is relative links. First of all let me tell you according to search engine there is no difference between absolute or relative links cause at last search engine converts relative links to absolute links as well to access link page. So that does not make any difference. Actually there is not major difference.
Absolute links
Absolute links are which we link absolutely with any other site or with our site for example <a href=”http://analytics.google.com”>Analytics</a> this is external absolute link to other site. <a href=”http://www.mysite.com/gallery.php”>Gallery</a> This is absolute link inside our site to gallery page. This is internal absolute link. For absolute link no matter internal absolute link or external absolute link browser go back to internet and search the URL again from start.
Relative links
Relative links are the links which are related to same site only cause we cannot make relative link to outer site or external source. Relative links with our internal pages or directories browser will just search those pages or folders only inside our server. <a href=”gallery.php”>Gallery</a> This way browser will do it fast and will see only inside our open url main url only. Relative links are fast cause of this reason.
How to use relative and absolute links.
As a web developer and working with some SEO companies i suggest you that make your logo and home page absolute link of your site without index.php in it link your logo like this <a href=”http://www.yoursite.com/”><img src=”logo.png”></a> And make other all pages as relative links to increase speed of browsing. The third thing when you have to make link to other site there is no way to use relative link cause for that browser have to go back to internet and fetch new site so make them absolute links as well and there is no other way to do this as well.
Read about Relative Links
Read About Absolute Links
Find out difference between absolute links and relative links.