Nofollow is a value that can be assigned to the rel attribute of an HTML a element to instruct some search engines that a hyperlink should not influence the link target's ranking in the search engine's index. The configuration setting Manual:$wgNoFollowLinks is used to control whether a wiki's external links should have nofollow or not.
Benefits and costs
The main benefit cited for using nofollow is that it deters spam. Mainly this benefit applies to pages where spam could be overlooked and therefore not be reverted.  Nofollow mostly deters spammers who are sophisticated enough to know about nofollow but either not sophisticated enough to realize they can still get a return on their investment even with nofollow in place or aiming for higher returns on investment. Nofollow unfortunately does not deter spammers if their motivation is to attract visitors to product pages rather than to boost pagerank, if your wiki is very popular.  Another cited benefit of nofollow is that driving pagerank to linked sites can be harmful to those sites or to the article subject; this, however, does not specify whether said harm is beneficial or harmful to the reader, who may find even (or especially) derogatory information useful, e.g. if it helps them avoid a shoddy product.
Using nofollow will prevent a wiki's links to other sites from boosting those sites' search engine pagerank, which is bad if the wiki owner wanted to boost their pagerank. Turning off nofollow is especially a good idea if you run a private wiki (i.e. one that does not allow editing by anonymous users, and that allows registration by invitation only).  In such a case, spamming is not a concern because the spammers lack access to edit. Some public wikis also avoid using nofollow because they want to encourage people to make useful contributions that add external links to their favorite sites.  Another cost of nofollow is that there is not yet much capability for using it selectively; it has been argued, "Can you imagine a web that works as good as today's if every link was tagged with nofollow?" 
- Alternatives to applying the same nofollow/dofollow value to all external links
- The dofollow FAQ
- Cumbrowski, Carsten (21 January 2007). All Wikipedia Links Are Now NOFOLLOW.This will not eliminate SPAM at Wikipedia, but it will over time certainly reduce it a bit. Especially the spam of invisible pages that have virtually no traffic but at least some PageRank is now virtually a waste of time for any spammer. Spamming of areas with traffic was futile already without the NOFOLLOW attribute in place, since Editors remove the SPAM within hours or even minutes after it happened."
- Cates, Andrew (22 November 2006). Nofollow. "Some spammers have western type return on effort criteria. Others do not: they live in China with a tiny income and are happy with an incredibly low success rate. If you get a link in Wikipedia it appears in all the mirror sites and many of these (such as answers.com, encyclopedia.worldvillage.com www.algebra.com ) do not use nofollow. The unsophisticated spammer doesn't know about nofollow. The sophisticated spammer knows he gets a return. You may put off a few in the middle and ones who won't accept a miserly pay-back. Also links on Wikipedia generate direct traffic (even us checking if they are genuine). People would spam even for that (some SEO companies even do contracts on a pay per extra visitor basis)."
- Disaffected Wikipedian (16 February 2008). Post details: MediaWiki software and rel=nofollow.
- MediaWiki notes, noah.org.
- Hammock, Rex (22 January 2007). All Wikipedia links are now 'nofollow'. "I’m not so sure this decision by Wikipedia regarding the NOFOLLOW attribute is very beneficial. Why not? It is a feature of most blogging platforms’ comments tool (links appearing in comments are not “indexed” by search engines, in other words) but that does not seem to slow down the attempts by link spammers to clog comments. Also, from my experience of maintaining a rather large and robust wiki, I think one of the reasons individuals participate in helping to create such resources is to pick up some link-love. In other words, I won’t be instituting the nofollow attribute on any mediawiki sites with which I am associated."
- Mayfield, Ross (11 January 2008). No Free Links and Why nofollow Doesn't Work for Wikis.
- No to Rel="Nofollow", NoNofollow.net