You might have heard that the more incoming links from other pages you have the better your website will rank. Well, that's to most extent through as long as they are coming from the right websites. Quality pages with a lot of traffic, old domain age, High page ranks, the same topic as your page are all great examples on factors that help search engines determine the value of good links. The big bad wolf on the other hand is link farms. The idea behind hyperlink farming is to increase the number of websites linking to yours because search engines such as Google rank sites according to, among other things, the quality and quantity of sites that hyperlink to yours. In theory, the more websites that link to yours, the higher your ranking in the search engine results will be because the more links indicate a higher level of popularity among users of the Internet. However, search engines such as Google consider link farming as a form of spam and have been implementing procedures to banish sites that participate in link farming, so the term has garnered negative connotations across the Internet.
There are many service providers who promise to help you boost your link popularity by automatically entering you into an exchange programs they operate, often linking your page with Web sites that have nothing to do with your content. But users should be aware of the repercussions of this action as the major search engines penalize sites that participate in link farming, thereby reversing their intended effect. A link farm is a Web page that is nothing more than a page of links to other sites. These "farms" can be advertised as services to build up your content. They are often set up by creating a network — one that is often created with the sole purpose of gathering a number of locations from which to point at a website. Because Google dislikes links between unrelated sites, some link farms divide their links into categories or a directory.
Link farms were originated in response to Google's ranking algorithm, PageRank. PageRank thinks of links as votes, where a page linking to another page is casting a vote. Therefore, pages with the most hyperlinks were deemed valuable. Link farms were created to help increase PageRank, however, in recent times, Google and other search engines have adapted their algorithms to prevent link farms from appearing at the top of search engine results pages (SERPs).
Web sites that have created link farms can be penalized by Google and other search engines. Link farming is considered a "black hat" method of search engine optimization (SEO) because the content on the web sites linking to each other is often not related, not created by a human (it can be created using programs or services) and is often of a very low quality. Search engines can detect link farms easily and they shouldn't be seen as a legitimate long-term search optimization strategy.
Bing is using this term loosely to refer to any form of link sharing scheme designed to hyperlink sites together with the intent of manipulating organic search rankings. Typically these farms have hundreds or thousands of hyperlinks to websites, often from old domains which once ranked well themselves but are dormant today. Three-way link exchanges fall under the same banner and should be avoided. Instead they recommend you to focus on building unique, engaging content. You should also make sure to enable social sharing options for your visitors. One more thing to conisder isenabling copy-and-paste code snippets to enable visitors to quickly grab them for the purpose of sharing.