Actually, @JCLimoNow, search engines can
follow "nofollow" links. They can (and do) follow the links to see what page each link points to.
They have the option
of deciding whether to "count" that link in the favor of the page it points to. When a site owner codes a link "nofollow" the site owner is simply saying to the search engines either "I don't vouch for this link," or "This link is not intended to count toward SEO for the page it points to."
What the search engines choose to do with this information is up to them.
This makes "nofollow" attributes appropriate for user-generated content (such as blog comments) where spammers are prone to drop links and site owners may not always be able to police them all. This way the site owner lets the search engines know any links pointing out to a "bad neighborhood" were not placed by them. Of course, if a site owner uses "nofollow" as an excuse to give up on policing entirely, and allow rampant spam in their comment stream, the search engines may still decide their site is not a reliable source of information and rank it lower as a result.
It also make "nofollow" appropriate to use to identify paid links. There's nothing wrong with having paid links, but Google has decided in their listings they don't want anyone to be able to influence the results by simply buying links. So links that are paid for (because they generate business or traffic that the site owner wants) should be identified so Google has the option of not counting those links for SEO.
And that's the operative part: it's all at the option
of the search engines what to do about "nofollow" links. There's nothing that forces
them to treat "nofollow" links any differently than any other link. They are actually free to "count" nofollow links in any way they choose if they decide that's appropriate for their listings. And they are free to not
give any kind of credit for any link, whether it's coded "nofollow" or not.
Meaning that just because you don't see a "nofollow" attribute on a link, that doesn't mean it's working in anyone's favor. And just because you see a "nofollow" attribute on a link, that doesn't mean it is a worthless link.