Link Farm
The SEO term Link farm refers to a type of search engine spamming where an organized group of participating websites hyperlink to every website in the group, with the sole purpose of increasing their search engine rankings by generating lots of incoming links. Link farming is penalized by search engines, and participating in a link farm (or accidentally linking to one) can result in your website getting penalized, filtered, flagged, or banned.
A Link farm is a large group of websites that all agree to link back and forth to each other, thereby increasing all of the participating members' link popularity. And if your link popularity goes up it will boost you up the list on search engine rankings (like Google's PageRank) and thus increase website traffic. Usually participants in link farms have entire web pages on their site devoted to links to other websites (and usually the links will take you to irrelevant websites with nothing in common with the one you're visiting).
Participants in a Link farm don't get to pick and choose who they want to link to; if you link to a link farm your website must link back to everyone on their list. This is an important point because it shows the difference between link farming and ethical link building practices (a difference which can sometimes be confusing). Ethical, white hat link building techniques also may include lists of links to other websites, but these lists are carefully compiled and relevant to the site. For example, a dialysis center might include links to pharmacies, support groups, and in home health services.
Link farms are also known as spamdexing, spamming, or spamexing. The SEO term Link farm is not to be confused with a link farm in the Unix Operating System, which has a different meaning.