What would this tool do?
This tool would allow the webmasters to disallow spammy and unnatural that are wrongly pointed to their website. This is a step to stop negative seo done for any site. Many webmasters were eagerly waiting for this kind of tool shortly after the Penguin update which penalized many websites having an unnatural linking profile.
Who should use this tool?
This tool should be used by webmasters whose sites have been penalized by Google due to unnatural links pointing to their website. Many webmasters who have received messages from the Google team regarding unnatural links can have this tool as their savoir.
Who should not use this tool?
This tool should not be used by webmasters who are having a natural link profile. Sites that have not engaged in link farms, paid links etc. must forget about this tool.
How to use this tool?
1- Visit:- Disavow links tool (You must be logged into your webmaster account)
2- Choose your website
3- Upload a text file containing the links you want to disallow. ( Example is given below:-)
domain:spamdomain1.com
domain:spamdomain2.com
http://www.spamdomain3.com/content1.html
http://www.spamdomain3.com/content2.html
http://www.spamdomain4.com/content1.html
http://www.spamdomain4.com/content2.html
The above lines would tell Google not to consider links from the domain spamdomain1.com and spamdomain2.com. It would further tell Google, not to consider links from pages content1.html and content2.html from the domain spamdomnain3.com and pages content1.html and content2.html from the domain spamdomnain4.com.
You may also add comment on any links using the hash sign.
#this is a comment
The maximum limit of the file is 2Mb.
What Google recommends?
Google recommends to remove your unnatural backlinks by either removing the links yourself or by sending a request to the concerned webmaster for the removal of the links. If still there remains some extra backlinks which you are unable to remove then you must use the Disavow tool.
Here is a short video from Matt Cutts explaining the working of the new tool :-
Also See:-
Top Ways To Get Natural Backlinks To Your Site
Are You Making Your Website Vulnerable To Future Google Updates
Battle of Ranking Continues
Link Baiting
How to Create Backlinks That Google Loves
Importance of Backlinks in Seo