If you have a blog and link to other sites (that don't link to yours back), you are giving your PR (Page Rank) away.
Why should you care? Page rank measures your site's popularity. It applies to each individual page and post on your blog. The higher the number you have (0-10) the higher up your blog posts will appear on search engines.
There's nothing necessarily wrong with giving your PR away; it's just what happens when you link to a site that doesn't link to yours. I'm all about mutual links--they're like a warm and fuzzy cyberhug and can help you exchange traffic with relevant sister sites. But if you have a blog with a high page rank and want to keep it that way, you might consider adding a no follow tag.
How to add a no follow tag:
Instead of linking to a site in compose mode, click on the "edit html" tag (for Blogger), or find the section in your blog where you can edit html.
You'll see regular links displayed this way:
When should you use it? Let's say someone else is placing a link on your site--it could be a guest blogger or advertiser--and it's linking to something that may not be relevant or you think is somewhat shifty. That would be a good time to use the NoFollow tag. Additionally, some bloggers and site owners simply use the NoFollow tag to keep and juice up their own site's ranking so it's attractive to potential relevant advertisers.
Personally, I haven't used it much on the WOW! site or blog. I try to link to relevant sites of interest to our readers and, truthfully, I really don't remember to use it often! But now that I'm writing about it, it's something worth considering.