I think you didnt read this en.wikipedia.org/wiki/Nofollow <a rel="nofollow" href="http://en.wikipedia.org/wiki/Nofollow">NO Follow Link</a>
To sum it up: Nofollow is supposed to be used when you don't trust the outgoing link, such as in a blog or guestbook comment. The rel="nofollow" attribute in a tags tells spiders not to count the link as a vote, or score the link/pass PR. The link will still be crawled or "followed". If you don't want links to be "followed", use meta nofollow.
I agree, but not all search engine spiders are able to understand the nofollow tag. some SE spiders are still crawling through those outgoing links despite the presence of the tag. it is suggested that you should use a cgi or php redirect, put the redirect script on a specific folder and then specify that folder as "disallow" in your robots.txt
It affect seo by telling crawlers not to follow a link to a website and thus no passing any seo benefit like passing PR value in links.
Wikipedia : nofollow is an HTML attribute value used to instruct search engines that a hyperlink should not influence the link target's ranking in the search engine's index. It is intended to reduce the effectiveness of certain types of spamdexing, thereby improving the quality of search engine results and preventing spamdexing from occurring in the first place. Google announced in early 2005 that hyperlinks with rel="nofollow" attribute[1] would not influence the link target's PageRank. In addition, the Yahoo and MSN search engines also respect this tag.[2] rel="nofollow" actually tells a search engine "Don't score this link" rather than "Don't follow this link." This differs from the meaning of nofollow as used within a robots meta tag, which does tell a search engine: "Do not follow any of the hyperlinks in the body of this document." rel="nofollow" has come to be regarded as a microformat. Cheers
I just wanted to add that it is also a way to not dilute your page rank. Some SE seems to ignore it though. I use the nofollow link for my affiliate links.
Important note: The meta robots tag "nofollow" in the HEAD of a document does not mean the same thing.