What a nofollow link is
A nofollow link is a normal link with the attribute rel="nofollow". It still works for visitors, but it tells search engines you do not vouch for the target. Google introduced it in 2005 to fight comment spam.
Since 2019 Google treats nofollow as a hint rather than a strict rule, and it added two more specific values: rel="sponsored" for paid and affiliate links and rel="ugc" for user-generated content such as comments and forum posts.
When to use nofollow, sponsored or ugc
Use sponsored for any link that was paid for, including affiliate links and sponsored posts; failing to qualify paid links breaks Google's spam policies. Use ugc for links added by users. Use nofollow for other links you do not want to endorse.
Values can be combined, such as rel="ugc nofollow". Do not nofollow your own internal links to "sculpt" PageRank; that has not worked for years and can stop pages being discovered.
Are nofollow links worthless for SEO?
No. They can still send referral traffic, brand searches and discovery, and Google may choose to use them as a signal. A natural backlink profile always contains some. Clear, descriptive anchor text matters on these links too.
Example
Link attribute examples:
<a href="https://partner.example" rel="sponsored">Partner offer</a>
<a href="https://user-site.example" rel="ugc nofollow">Commenter's site</a>
<a href="https://unvetted.example" rel="nofollow">Source</a>