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Nofollow is an attribute that can be added to links to discourage Comment Spam. It is used with the rel=" " attribute in a link.
<a href="http://example.com/article" rel="nofollow">Article Example</a>
As described in the Google Blog:
From now on, when Google sees the attribute (rel="nofollow") on hyperlinks, those links won't get any credit when we rank websites in our search results.
By default, posting links generates no positive benefit for the poster in terms of PageRank (or other search engine value) the spammers will be dissuaded from wasting their time. Time will tell how well this works.
To use it, you modify your links like this:
<a href="http://wordpress.org/" rel="nofollow">wordpress!</a>
WordPress 1.5 and above automatically assigns the nofollow attribute to all user-submitted links (comment data, commenter URI, etc).
Despite nofollow's Google backing, there is some very strong criticism from the overall blog community.
To disable nofollow, use one of the following plugins:
Ultimate List of Dofollow & Nofollow Plugins. This is a constantly maintained list of plugins to add nofollow and remove nofollow from various elements of WordPress. The list also covers other blogging platforms such as Blogger, Moveable Type, Typepad and Drupal.
Comprehensive Reference for WordPress NoNofollow/Dofollow Plugins - A concise, current, and comprehensive reference for WordPress no-nofollow and dofollow plugins. Currently featuring 12 dofollow/no-nofollow plugins, this ultimate guide will help you choose the best plugin for your blog.
Nofollow can also be disabled with the functions.php file of your WordPress Theme. Users juste have to paste a hack in order to remove nofollow from both comments and author links : Remove Nofollow with functions.php (FR)