I understand the benefits of having NoFollow links to other websites, but I'm a little confused about the SEO benefits having NoFollow links to other pages within your site. Please explain this to me.
If you want your other pages to be indexed, then do not use nofollow when linking to them. I myself don't use nofollow when linking to other sites ether because I believe that if I am linking to them, then they earned that link and deserve the page rank I send them and I would apreciate someone else linking to me dofollow without me asking for it.
Nofollow is beneficial for forums because of all the duplicate content. On a site or blog, you may want to use nofollow for certain pages like Contact or Sitemap, etc.
This isn't an SEO benefit, this is a Pagerank benefit. It prevents you from passing on Pagerank value to your inner web pages. You can effectively use nofollow for SEO with internal linking, basically by blocking web pages with little to no importance you can help indexing and the crawling rate of all your web pages.
It's just to sculpt PR flow. Consider that on many blogs, one of the pages with the highest PR is the 'about' page (a lousy landing page) as it's linked to from all of the other pages. By making the link to 'about' nofollow, you can spread that PR juice equally to the other links on the page. You could do the same thing to stop passing juice to external sites, but this is considered to be poor form.
Oh ok. So basically just make all links to unimportant pages such as about pages, terms pages, contact forms, signup forms, and stuff like that NoFollow so Google doesn't index them. If there are too many DoFollow links to unimportant pages then other important links on your page may not benefit from your PR. Gotcha!