What are link farms ? How it works ? Generally websites which contains only links with little or no quality content. The original idea is behind this concept ( link farming ) is to increase the number of sites that link or point to specific site. When search engines ranking web sites or web pages they were consider so many signals. When we talking about google they consider more than 200 signals when they ranking web site or web page. From these signals "back links " is a one signal. So link farm is a kind of process to artificially boost rankings through link popularity. These links farms has loads of links but no valid or quality content.
These websites only existing to operate exchange of links, with the purpose of artificially increasing the popularity of other websites. It is considered as a 'Black Hat' technique and it is penalized by the search engines.
Link farm is concept came to the world as result of search engine optimization. In early 1999 yahoo is the # 1 search provider in that time. and Inktomi feeding to yahoo too. As mentioned earlier link popularity is used by some search engines to help establish a ranking order for search results . And search engine optimizers in 1999 took the advantage of this. Inktomi directory is the main target.
Anyway, search engines such as Google consider link farming as a form of spam indexing. Google and other search engine bots knows to find these link farms, and have been implementing procedures to ban sites that participate in link farming, The link farming is negative SEO factor and also black hat SEO method. If you have links from link farms your site have opportunity to risk of penalty and ban from there search indexes.
There are many service providers in the industry who promise to help your site to boost up link popularity. Before selecting these type of service check what is the method they using.
If you need more about guide lines about this topic , better to follow these links.
finally don't get caught to search engines with these type of black hat SEO methods. If you do so you may need to find some other way of doing you business with out internet support.