Link Quality and Link Rot

Link Quality is how good your links are, Link Rot refers to broken links.

Link Quality
Link quality refers to how well your links perform and how trusted their website of origin is.

Link quality can be influenced by several factors:
A high PageRank is always an indicator of a trusted and authoritative website and a link from a website with high PageRank is always given more value.
Older links or links from older websites are interpreted as quality links.
Links that point to your competition and that link to your site make it easier for search engines to determine your community. This is called co-citation.
Related links and editorial links (links to content pages) are also highly rated.
Matching anchor text is always highly regarded.

Link Rot
Link rot refers to links on your website that are broken. This is identified by Error 404: Page Not Found.
Search engines see link rot as an indication of outdated content.

Broken links occur for a number of reasons:
The website that the link comes from has gone offline,
The link was temporary,
The location of the page that you linked to has changed, or
There has been a change in a website's content management system.