On July 20th, Google sent out a batch of new link notifications that scared the webmaster community. Google then informed us we can relax about those notifications because they are ignored links that don't specifically hurt your site.
Still, there was a lot of confusion. So over the weekend, Google's Matt Cutts posted a detailed blog post on what these notifications means. He wrote:
In less severe cases, we sometimes target specific spammy or artificial links created as part of a link scheme and distrust only those links, rather than taking action on a site’s overall ranking. The new messages make it clear that we are taking "targeted action on the unnatural links instead of your site as a whole." The new messages also lack the yellow exclamation mark that other messages have, which tries to convey that we're addressing a situation that is not as severe as the previous "we are losing trust in your entire site" messages.
Cutts Says Do Not Ignore The Links
Matt Cutts said do not ignore the links despite what we thought Google told us to do on that Friday.
These new messages are worth your attention. Fundamentally, it means we're distrusting some links to your site. We often take this action when we see a site that is mostly good but might be might have some spammy or artificial links pointing to it (widgetbait, paid links, blog spam, guestbook spam, excessive article directory submissions, excessive link exchanges, other types of linkspam, etc.). So while the site's overall rankings might not drop directly, likewise the site might not be able to rank for some phrases. I wouldn't classify these messages as purely advisory or something to be ignored, or only for innocent sites.
On the other hand, I don't want site owners to panic. We do use this message some of the time for innocent sites where people are pointing hacked anchor text to their site to try to make them rank for queries like [buy viagra].
Anyway, Matt goes into more details on the Google Webmaster Blog.
A WebmasterWorld thread has Tedster saying he would still focus his time and resources on other things and not go after removing links in this link unharmful notifications.
Forum discussion at WebmasterWorld.