When I create a document, I have an option to link it with other items. What is the difference between 'Linked to' and 'Linked by'?

Indeed, when you create the document, you get the whole spectrum of functionalities that makes it simple to add references to items created in your project. One of them is linking. As you noticed there are 2 types of linking:

• Linked to refers to the items that are referenced in the document and therefore that point to them (this could be assertions, sources etc)
• Linked by are items that refer to the document (so it's the other way).