Sort of a 101 tutorial:
Interesting part about nofollow&dofollow:
Nofollow & Dofollow
A lot of people go out and source dofollow links, but in doing this they do more harm to their link profile. Every website should have a good balance of nofollow links - there have been cases where sites with a very low number of nofollow links have not ranked as highly as others who keep a good balance.