I have read some posts all are saying hidden links are bad and are part of black hat SEO. Everywhere it is stated as the hidden link is a link that cannot be understood by the visitors. I am really confused with the explanation that how to identify that? Please help me out with some more simplified version which I can use to identify hidden link
It's not "hidden links"... It's "hidden text"... And typically it is accomplished by setting the text color to the same as the background... For example, black text on a black background. Or by hiding the text w/ CSS.
In some cases, hidden text will be easier to identify than in others. If you find a page with a lot of empty space (usually between the last paragraph of text and the lower navigation structure), hidden text may be used. An easy way to identify hidden text is by clicking and holding down your left mouse button over the suspected area and highlighting it. If words appear that weren't there before, you've just identified hidden text. You can also keeping the page opened and press CTRL+A...
hidden links are pretty common too, especially in joomla templates. run the site through the bad neighbourhood tool it'll show you every link leaving the page whether visible or not