A no-follow link is used when a website does not want to pass search engine authority to another webpage. It tells search engine crawlers not to follow or pass credit to linked websites to avoid association with spammy content or inadvertently violating webmaster guidelines. To varying degrees, the no-follow attribute is recognized by all major search engines, like Google, Yahoo, and Bing. Not all links (and linking domains) are created equal, and a no-follow attribute helps avoid foul play.
Imagine a blog post discussing various software tools. The author mentions a particular tool within the post and includes a hyperlink to its website. However, since the author doesn’t want to pass on any authority or ranking credit to the linked site, they add a no-follow attribute to the hyperlink. This ensures that search engines don’t consider this link when determining the linked site’s search engine ranking.