In the musical universe I love it when songs reference other artists or songs in either an overt or subtle manner. This creates a continuous feedback loop where the self referencing world of pop music reinforces it's own history (and mythology), creating context and legitimacy for a largely derivative form of expression.
One of my favourite recent examples is in the song "So Far Around The Bend" by The National; "You’ve been humming in a daze forever, praying for Pavement to get back together". A good illustration of the power of art to imprint itself in the brain and become entrenched in our psyche.
One of the most obvious, and perhaps my favourite example of overt referencing is the Camera Obscura song "Lloyd, I'm Ready To Be Heartbroken" (2006) in response to "Are You Ready To Be Heartbroken?" (1984) by Lloyd Cole & The Commotions. It is a playful track and I can picture singer Tracyanne Campbell being a fan of Cole and flaunting the influence proudly.
There is a reason why some of the most compelling forms of art, music and film are often those that are aware of their own history and our able to reference both itself, as well as that which may be behind it's own genesis. This provides a sense of place in a creative universe where connections create a dynamic sense of birth and rebirth, where various forms play off each other and grow into something new.
These are a just a few thoughts brewing in my brain, anything to add? Most importantly of course, what are some of your favourite musical references within a song?