Google uses links as signals to help them order search results. They look at the links between pages to get a feel for which are the most reputable and important, therefore most relevant to users.
Link analysis forms the basis of PageRank, one of the 200 or more signals Google relies on to determine web page rankings. As such it has always been open to abuse by link spammers.
Do you need to disavow your backlinks?
Google fights link spam using constant algorithm updates supported by manual action. They’ll let you know if any of the inbound links to your site are suspect.
If you’ve received a message from the big G about your link profile you’ll welcome their new disavow tool designed to help you wash your hands of bad links. If you haven’t had a notification you don’t need to worry about it. Just bear the disavowal tool in mind in case you ever need it.
What does disavow do?
If you have done your best to clean up your profile in the usual way but some of the buggers are impossible to shift, visit the Google Disavow Links page. From there you can ask Google to ignore low quality links that are out of your control.
Here’s where you’ll find more info: http://googlewebmastercentral.blogspot.co.uk/2012/10/a-new-tool-to-disavow-links.html