Here is an article that explains the different types of breeding:
Types of Breeding: Inbreeding, Line-breeding, outcrossing, outbreeding
While inbreeding is not recommended for the inexperienced, I must add that if it were not for inbreeding and close line breeding, we would not have most of the breeds we have today. Most people have a great misunderstanding about inbreeding and think that all inbred dogs are nuts or have something terribly wrong with them. I found this to be very untrue.
Line breeding is breeding more distantly related dogs, grandparents, cousins, aunts and uncles. Even line breeding has to be monitored closely because your gene pool can still get too small. Even the best breeders that line breed will bring in different bloodlines ever so often.