The full quotation
I think it is important to listen to the full quote and not take part of it out of context...
i.e. Who you link to and who links to you.
I suspect that a key part in this the hint that it may be if you link to something iffy in Googles interpretation then you get a black mark for effectively promoting a "naughty" (in bot terms of course !) site which is against Googles interest of course. If that site also links back to you it looks even more sus to Google when they examine your site and so the penalty may well increase even more.
Just a thought.
Paul
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