From Wikipedia, the free encyclopedia: On the World Wide Web, a link farm is any group of web sites that all hyperlink to every other site in the group. Although some link farms can be created by hand, most are created through automated programs and services. A link farm is a form of spamming the index of a search engine (sometimes called spamdexing or spamexing). Other link exchange systems are designed to allow individual websites to selectively exchange links with other relevant websites and are not considered a form of spamdexing.
Link farms is one of the black hat techniques. (forbidden) If you follow this, search engines will banned you.
Search engines don't like link farming. I tried it on one of my old site just to test it out and my site got a very ranking but I've stopped promoting it now. All it is, like getting links from unrelated places just to increase your backlinks count to help you do better in rankings. You'll run into a link farm if a stie contains hundreds or thousands of links in their "Links/Resources" page.