Danny Sullivan, Google's Search Liaison, clarified that the site reputation abuse policy is not related to linking, meaning the links to and from a website do not impact this policy. Instead, the policy focuses on content that abuses a site's reputation.
Google defines site reputation abuse as the publication of third-party pages with minimal or no first-party oversight or involvement, intended to manipulate search rankings by leveraging the first-party site's ranking signals. These third-party pages can include sponsored, advertising, partner, or other pages that are generally independent of a host site's main purpose or produced without close supervision or involvement of the host site, offering little to no value to users.
Link spam is a separate policy where link qualification can be beneficial, regardless of whether it's nofollow or sponsored. He emphasized that any confusion should now be cleared up - the policy is about the content, not the links.