Directory submission creates inbound links
Directory submissions are a useful source of Backlink and also if used in the right directories can be a good form of advertisement.
Manual submission for the directories is essential. Search Engines have become wise to automated submissions. If done using the automated method you could get your listings either banned or dropped in a short space of time.
The Backlinks that the directories cast are also useful; if the links are submitted to the correct categories the search engines will give them more authority due to the relevance of the link. These types of links can vary depending on the SEO services offered.