Most people know that links are what helps your site rank higher
in the search engines. It used to be a simple process, get as many links as you can from anywhere. All you had to worry about was getting more links to your site than your competition had. You could set us software to do it automatically for you, simply insert some spun article set the anchor text and let it go. Well those days ended with Google penalizing sites with links from non relevant or low authority sites. Those sites everyone used to get a link from. You never had to really worry about the links going out from your site. Until now, that is.
The reason Google penalizes you site for some inbound links is because it’s against their rules to use links to manipulate the search results. So now they’re going after you for linking out to sites that are not relevant. That means if you link to a site just they will give you a link in return, that’ against the rules and they’ll penalize you for it.
Here is the whole story and explanation for Google’s Matt Cutts.
If you see this message on the Manual Actions page, it means that Google has detected a pattern of unnatural artificial, deceptive, or manipulative outbound links. Buying links or participating in link schemes in order to manipulate PageRank is a violation of Google’s Webmaster Guidelines.
As a result, Google has applied a manual spam action to the affected portions of your site. Actions that affect your whole site are listed under Site-wide matches. Actions that affect only part of your site and/or some incoming links to your site are listed under Partial matches.
Get the whole story here