A linked document is a "stub" or "shortcut" of some existing document. It allows you to place a single document to multiple places in the content tree instead of creating its copies. Such a document is then displayed in the given part of the web site, but when you edit it, you actually update the original document.
This feature is useful if you need to include a document (product) in multiple site sections (product categories), but keep only one instance of the document.
In order to create a linked document, click New and choose Link an existing document in the bottom of the screen:
Then, choose the document that should be linked to the current location:
Click Save to save the new link. The link to the document will appear with an arrow in the content tree:
You can see the list of all linked documents for the currently selected document in the Properties -> Linked docs dialog.