I requested a link exchange with another site the other day and the webmaster refused. His reason was that I was linking to a link farm. What did he mean by that?
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.
A link farm is a web page that is set up for the sole purpose of allowing webmasters to exchange links with each other for search engine ranking purposes only.
Link farming is some how a new term that is why most people don't know exactly what is it. And it is also a truth that this term is also not explained by google. So, people throw ideas by their selves. The basic concept is that some websites have duplicate or low quality content with continuous / bulk updation of the websites. It is also seen that people change the content by changing the synonyms. That is not good for Googlers.So they are trying to keep the web neat and clean.
From seo point of view Links farms are bad, it is because many of them think that these farms provide you backlink or a tree of back-link but it is useless and spammer.