The rel=â€nofollow†tag is a HTML attribute that is used to tell search engines to assign no value to the link it is attached to. How well you rank in search engines results pages is determined by the number and quality of links pointing to your site, so when the nofollow tag is used it will negate any value a link to your site would normally have. The nofollow tag was originally created to combat comment spam, but of late people have started to question its effectiveness as well its unintended side effect of punishing people who engage in legitimate discussion on blogs. All the major search engines say they respect the nofollow tag but from what I have observed Yahoo seems to ignore it. Or check this link for another info: http://www.ihelpyou.com/articles/seo-marketing/what-does-the-nofollow-attribute-mean.html
see http://en.wikipedia.org/wiki/Rel%3Dnofollow from what i know.Only google obey this thing.The rest of the search engine dont ready care about it. As i use index no follow alot.I notice that only google obey this .Google will not go into this link plus will not give page rank also.However if you see that the link you dont want to get listed is there most likely someone have link that page or bug. You can use it on the robots text also Disallow: /folder/ ------------------------------------------------ If you want your site to index very fast use Sitemap: http://website/sitemap.xml on the robot text They work on google msn and yahoo since april 1. However please take note of google sitemap.If you are make for adsense site they can easy ban you site in mass when you put all your site in one google sitemap account.Google didt tell anyone on this.
nofollow tells SE bots/crawlers not to follow certain link anymore (so the link will not be counted as backlink)...
it's used for the links that you dont want googlebot to visit. read http://en.wikipedia.org/wiki/Nofollow
Personally I use it for affiliate links. I want the SE's on my page, so that visitors are likely to click that link, buy something and I get commision. If it's a direct link without rel-no-follow, the SE's will go to the seller direct.
It doesn't actually punish them, it just doesn't reward them. Still, a number of blogs seem to be stripping the nofollow attribute to promote more readership.
Here's an article of mine on the topic, just in case you need some more information on the nofollow tag: nofollow tag and Google