How should good navigation look like?

Good Navigation can be broken down to one word - "Breadcrumbs"

If you remember the fairy tail "Hanzel and Gretel" you will recall that when the children were kidnapped, they dropped breadcrumbs so that their rescuers would be able to find them. In our situation, imagine its your site that has been kidnapped and the Search Engines are your "rescuer".

An example of Breadcrumbs would be the following

*Home-->Sublevel1-->Sublevel2

This type of navigation allows the Search Engines to find all of your pages in the most efficient and thorough way. It also aids "Deep Crawls" which are crucial to dynamic sites which may have 100,000 or more pages. Not only should you use this style of navigation behind the scenes but displaying the Breadcrumbs somewhere on the site will help both the Search Engines and visitors alike. A perfect example of this is www.dmoz.org

The second part of navigation is the "site map". This is a page which contains a link to every one of your pages. To be fully optimized, the links should have a descriptive anchor text to further help the page you are lining to. In addition your site map should always be within one click of the index page as this will help the Search Engines find it quickly.

Using these two methods of navigation will ensure your site gets fully indexed and will add to your users experience

Types of Links
The major type of navigation to avoid or to at least compensate for is Javascript pulldown menus. Because Search Engine bots will not follow these, it is important to compensate by having text links somewhere else on the page. These can be in the footer or worked in elsewhere in the content. In fact, Javascript as a navigation in general has been shown to hinder indexing. There are a few alternative ways to code your javascript however if you always code a backup plan, you will enjoy easy indexing without the worry

Answer provided by: yfs1

A very important point to remember is that always link to your main pages from your home page and if possible from other pages as well.
If you have a link from your home page to another page of yours then you are telling the search engine that this page is also important and needs to be indexed soon. Same goes for pages linked from many pages within the website . A good practice is to add a link to sitemap from your home page . The sitemap contains link to all other pages and helps in faster indexing.
Additionally all your pages should also have a link to the home page so people can return to home page in case they find lost .
This also adds weight to your home page from a search engine's point of view.
The text in the link should describe the page as closely as possible and if using image links you must add ALT tags in the image .
If you really need to have a javascript navigation then you should also add text links at the bottom of the page .

Answer provided by: s jeet