Permanent link or in short Permalink is an address that links your posts with your blog's URL. For each post you write, a permalink is generated automatically. It is an important aspect of your blog's SEO and should not be neglected. There are usually two types of permalinks- an automated permalink and a custom permalink. An automated permalink is generated according to the title of the post and is not recommended for a good SEO score as it may have too many stop words or other phrases which may actually dilute your focus keywords. So, It is always good to use a custom permalink which has more focus only your keywords which is good from the optimization point of view.
A custom permalink has a positive effect on your site's rankings as it contains majority of your focus keywords. Let us have a look at an example to get a clear idea.