I am a strong believer of having a definitions or glossary page on your site. Not only that, to link words in a nice fashion from the origin page to the definitions or glossary page is good practice. I have been doing this for a long time, way before I even thought of the search engine benefits. For example, on my RustyBrick Technologies page, I have lots of technical words. I used a dotted underline, under the word to symbolize that this word is defined. An end user can then mouse over the word to get the title= attribute (i.e. a little contextual pop up with a abbreviated definition of the term. If they click on the term it takes them to the full definition, anchored down on the definition page.
Not only does this benefit the end users, it also helps me rank well for keywords and I even get top place in Google Definitions. I talked about this twice in the past. Once under the title, Google Definitions Help with Rankings and an other time under the title, Google Definitions Traffic Slump.
Forum discussion at Search Engine Watch Forums.