You have got enough answers that explained you what is a link farm. Read this wiki entry for more details http://en.wikipedia.org/wiki/Link_farm
A link farm is a website created for the sole purpose of increasing link popularity of other sites, increasing the number of inbound links to those sites. They are typically a long list of related links. Some link farms are created networks sites contain numerous links to others.
Can a blog roll be considered a link farm? I had a blog roll which list down all my friends' blog. Will Google consider this page as link farm?
Basically like an ordinary farm that has lots of animals, a link farm has lots of low quality links that have very little or no value. After the Panda update there is no real purpose in submitting to these link farms as a large number of these links are devalued. So apart from getting your link posted you will not have any real deal regarding the PR.