What does it mean?
It simply means that when Search Engine crawlers, bots or spiders sees the “NoFollow” attribute on the link it will not follow that link or simply skipped that link.
Here is example syntax for a “NoFollow” tags:
<a href="http://www.domain.com/dir/page.php" rel=”nofollow”>Text Link</a> link
When search engines, particularly Google (I dunno about MSN and Yahoo if they also implemented this kind of rule) sees a “nofollow” tag on an HTML link, the Googlebot will no longer follow that link…(it’s more likely other way of saying to the bot or crawler… Ooopss… stop right there! It’s a dead-end.) Nor assign link popularity to the site linking. As we all know, theory states that the more sites linking to you (or called the inbound links) have bigger chances to be popular and rank high and also it’s (link popularity) the basis of the PageRank computation.
When Googlebot sees a “nofollow” tag as part of a link, it will:
1. NOT follow the link destination. It means that the link pointing to a particular page might NOT be index by Google. However, Google gives consideration if determines that the single link is an “ordinary link” that points to a particular page then it can be index. We all aware to the fact that the more links (inbound links) pointing at a particular page (particularly Google and the other major search engines) has bigger chances to be index.
2. NOT count the link for Page Rank computations. It means that the link will not be counted as a "vote" and will not be included in computation for PageRank.
3. NOT count the text link (anchor text) in determining the relevancy of the page is being linked to. It means that Google will not recognize or count the anchor text (if you want to rank for a particular keyword or words) that links to a page. Having a nofollow attribute is a way of driving out spammers.
The important thing is that the Google’s “NoFollow” tag applies only to comments, signature links or links, not to the original posts. The links made from the original blog posts will still be followed, indexed and weighted by the Search Engines.