The disavow link tool is a tool you can use to disavow (that is, disown, reject, and recant) links to your website in case they are "unnatural" in nature and can possibly do more harm than good when it comes to your site's search engine optimization (SEO). Whenever a manual spam action is done to your site, you can use the disavow links tool (made by Google or Bing) in order to resolve the issue. Obviously, links are the strongest signal used by search engines in order to gather content for its search engine results pages (SERPs). Google tends to look at links as signals that help establish the relevancy, importance, and reputation of a given site to its user base.
Explaining Why the Disavow Link Tool is Important
Because links are what Google uses in order to know which pages are relevant or not, they use links as a basis for PageRank. Of course, the link is just one of the 200 signals they depend on in order to determine a given site's ranking. Meanwhile, algorithms and manual action is what the search engine giant uses in order to fight link spamming and abuse from spammers who are forever targeting the best PageRank for their spam websites. Link spam is a major SEO problem because the link is one of the most well-known (and easy-to-replicate) signals of relevancy, so spammers will naturally concentrate (and abuse) that particular element.
Link spam is also what one would call, "unnatural links" because it's forced down users' throats and ruins the user experience in more ways than one. It's also disadvantageous for sites to have their links spammed because Google now punishes such actions with impunity. More to the point, according to Google's quality guidelines, using link exchanges, paid links, and other linking techniques is a violation of its rules. If you don't want your site to be punished for link spamming (or at least acquiring low-quality links with barely any relevancy at all), then it's in your best interest to make use of Google's Disavow Link Tool.
A Message of Concern from Google regarding Unnatural Links
If, in your webmaster tools, you're contacted by Google about any unnatural links that target your site, then you should remove those links from the Internet as soon and as much as possible so that your site itself won't be marked as spam. Removal of links is one of the best approaches you can take because it gets to the very root of the problem. You have no use for bad links, especially considering the latest Panda and Penguin updates that now severely castigate spammers and link abusers more than ever. You'll then need the disavow tool in order to keep you from suffering "disciplinary actions" in the future. Disavowed links will need to be crawled through again before your disavowals can go into effect, though.
The disavow links page will help you remove problematic links that are unknown to you or you can't delete manually. With that said, it's best to use the tool after you've deleted bad or unnatural links by yourself instead of before doing so. The point of the disavow link tool is to point and report spam links that you've probably not instituted yourself so that their abusiveness won't reflect on your website's SEO negatively. With that said, you shouldn't use this tool to disavow internal links, because that will harmfully impact your SEO and whatnot. Use the disavow link tool with due care and as instructed.
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