How do I create permanent links to my posts?

Permalinks are "permanent links" to blog posts; they're one aspect of blogs that differentiate them from other forms of web content. Some good discussion of their history is over at plasticbag.org.
Permalinks are created in two steps. First, a unique identifier is applied to each post using an anchor tag, like this:

<a name="<$BlogItemNumber$>">&nbsp;</a>

(This should go somewhere in your post body. If you include it in the itemtitles section, your post will only get numbered if you specify a title.)

Second, you need to display the permalink for each post. This is usually done in the footer and near the author name:

<a href="<$BlogItemPermalinkURL$>" title="permanent link">#</a>

These tags are already present in Blogger's default templates, but could be useful if you're rolling your own.