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All a symbolic link is, is a pointer from one "file" to another "file". The reason those are in " is because *everything* in *nix is considered a file, whether it's a file, directory, block device, character device, tape drive, named pipe, etc... All arguments given to a symbolic link will be compared against the binary's to see if they can run and will run using the linked binary if possible. Example below:
The symlink doesn't have to point to an existing file (as already stated as well) and it does nothing more than pass on the real target to the shell.