But again, if this is true then what's stopping me from setting up a bunch of Virtual Machines and setting up some SEO spam tools to spam my competitors links around?
It's my belief that there is no negative impact, only a net loss impact, unless it can be explicitly proven that the rules have been broken. For example:
Buying or selling links that pass PageRank. This includes exchanging money for links, or posts that contain links; exchanging goods or services for links; or sending someone a “free” product in exchange for them writing about it and including a link
If it can be proven that money has changed hands then an entire site can be banned, and it's happened before.
Excessive link exchanging ("Link to me and I'll link to you")
Again, it is on the web spam team at Google to prove without reasonable doubt that this has happened. Sites have been banned by Google before when this has been proven.
Linking to web spammers or unrelated sites with the intent to manipulate PageRank
To me, this suggests that you have linked to this from your own site, rather than a site linking to you.
Building partner pages exclusively for the sake of cross-linking
Again, if this can be proven then you could be banned. This one isn't so hard to prove at times.
Using automated programs or services to create links to your site
This one is where I think their guide falls apart.
If, for example, I were a competitor of SitePoint, what is stopping me from spamming SitePoint using various linking tools? How could Google possibly penalise SitePoint for my actions?
The only penalising I can think of is the penalising of any natural links that were built during that time, but then surely this would be fixed at a later date after re-crawling?