When I write a post in my blogs, whether PChuck's Network, or The Real Blogger Status, or whatever, it's a challenge to get the post into a finished state. The most obvious challenge there is writing the content, but linking the content to other content is a struggle too. With a pure blog, you write a bunch of posts, related or not, and have an index to the posts in the sidebar. The reader reads the index, and select a post to read. The posts are linked through the sidebar.
My blogs aren't pure blogs - they are hypertext documents, using a blog structure. Using the Blogger One Button Publishing structure allows me to concentrate on writing content, and dealing with formatting, structure, and style later, or as time permits. Some of my blog posts are linked to other blog posts, through links in the text, but with others you'll still need links in the sidebar.
With Classic Blogger, the links in the sidebar were provided through the Archives. All of the posts written in a given month or week were arbitrarily linked together, in one archive period. You could select any archive period of interest, and get a main page view of all of the posts written during that period. For any individual post, you could also examine a list of the 10 posts preceding that post, by title, and view any post of interest to you.
And that was basically all of the choices that you had available to you. This was fine for the search engines, if not for you. A search engine spider had to only find the Archives link structure, walk through that structure, and have an index of all posts. Alternately, the spider could find the 10 previous posts list, which would similarly give an eventual link to every post in the blog.
This was fine for the spiders, but humans found both the Archives and Previous Posts lists to be a waste of screen space. Many Classic blogs would omit one, or both, from the sidebar.
New Blogger, and the Layouts templates, provide several additional choices. The Archives list has been expanded, to include 3 different display options, including a collapsible hierarchical list of post titles. Using the latter option, you can dispense with the 10 Previous Posts list. And the introduction of Labels, or keywords, allows you to associate posts by content, not posting date. And with Layouts templates written in XML, which is way more versatile than HTML, you can actually write mini-applications.
Two applications written in XML, which are useful in sidebar organisation, are the Cumulus Hidden (MultiStyle) Label List, and the Cumulus Hidden Link List. Similar to the collapsible Archives list, they allow you to collapse a long list of labels, or of links, into a neat, small toolbar. One or more toolbar buttons let you expand the respective list, when needed.
The problem with both the Hidden Label List and Hidden Link List is that both, as well as the Archives list, are probably transparent to the search engine spiders. A blog that relies purely upon either of the 3 options for linking posts may not be fully indexed by the search engine spiders.
Fortunately there is another option. With Layouts templates, all posts are linked through an extended main page view structure. You setup your main page view to show "nn" number of posts. If your blog contains more than "nn" posts, at the bottom, you should have a link to "Older Posts" (and to "Newer Posts", if the main page is not displaying the "nn" newest). Both the readers, and the spiders, can read your entire blog, in sequence, by following "Newer Posts" / "Older Posts".
Just be sure to leave at least one of the above options in your blog, and both your readers and the spiders will be able to read the entire blog. And, if you're curious about how well connected all of the posts in your blog are, check out Sala's HTML Graph Applet, and see how many nodes you have in your website (blog).