If you are playing the Facebook version of AVH, the game will start posting messages on your wall, such as you buying a horse, or maybe you advancing a level.
When that happens, the links on your wall will have your referral id, so if any of your facebook friends join AVH (by clicking the links on your wall) and then advance levels, you will be receiving credits.
So if you have enough Facebook friends that like colored horses, you will earn a lot of credits :P


PS: The Facebook version can be accessed at http://apps.facebook.com/avirtualhorse