Think in terms of American cowboys.

The good guys wear white hats.

The bad guys wear black hats.

Whitehat good; blackhat bad. Simple as that.

There is also greyhat/grayhat which means that it's in a grey area between the two.

What do people actually do to be 'bad' or blackhat though?

In relation to SEO, it refers to those who use techniques which are underhand or break the rules of search engines. Things like hidden links and doorway pages are blackhat techniques which were used in the past. In general, the best blackhat techniques are not often made public.

Blackhat refers to SEO techniques that go against search engine guidelines. Using blackhat techniques can get your site banned if the search engines catch up with you.

So white links on white backgrounds etc. Ahhhh thanks for the answer.

Black hat is...
hidden links, hidden text, tiny text, white on white links, keyword stuffing, cloaking, misleading redirects, arbitrage, scraping, synonymizing, doorway pages, link farms, browser hijacking, hot-linking, email harvesting, and especially SPAM in all its forms:
email spam, search engine spam, social bookmarking spam, comment spam, forum spam, domain spam, blog spam, etcetera.

Well seen as I don't even know what some of those techniques are I think I'm safe!

Second question - does blackhat actually work?!

Second question - does blackhat actually work?!

Only until you get caught. Check out the Google section of this forum. There's a ton of whiny "I got banned from Google, how do I get back in" threads.

once you start abusing some technique and/or over do it, like stuffing your page with tons of keywords, you're doing black hat and sooner or later you will be punished for it!

You are only discussing blackhat in terms of SEO - the word Blackhat has been associated with hacking for many years. A BlackHat Hacker is one who does illegal things for bad reasons (personal gain, to cause damage, malice, etc). A whitehat hacker would be someone who does legal things related to computers for good reasons (help companies become more secure, etc) and a greyhat hacker would be one who can do both legal and illegal things for someone reasonable reasons.

I'd further point out that while the term 'blackhat' as noted above has some negative overtones, I believe it's morphed in the last few years, particularly with regards to SEO.

I view someone as blackhat if they either use automated techniques or take advantage of search engine algorithm loopholes (some of which have been noted above). Those are the two things that distinguish a blackhat from a whitehat by my definition. It's not about legality, or morals, though many disagree.

The idea that a blackhat is somehow 'wrong' I think is due in part to the hacker background, where blackhats did stuff that was illegal. SEO isn't illegal, including doorway pages or white on white text.

As for the idea that blackhat's get 'punished', that's wrong too I think. I suspect there's plenty of blackhats raking in gobs of cash. If you find a loophole or something that works, and get it ranked for 3 months, making $30K a month, then get banned, I'm not so sure that making $90K in 3 months is getting punished. Particularly when the next step is to repeat the previous success on another domain name. Getting banned I suspect isn't a punishment, it's just a viewpoint of making a lot of money from a site in a short period of time, throwing it away and doing it again somewhere else.

If you're a whitehat and pour your heart and soul into your site, then yes, getting banned is punishment. If you expect it and plan for it, it's just an $8 domain name you get made $90K from.

Conversely, white hats will typically work within search engine guidelines. This doesn't make them legal, or even morally correct. It just makes them those folks that for some reason or other have decided that the way for them to get ranked is to do so within search engine guidelines.

I have about 50 links at the bottom of my page for navigation to 50 of my pages - namely retailers. I find it helps the user as they mainly want to go directly to those pages.

Would that be considered blackhat in seo terms? I've got a PR 4 site. I'm not trying to do it for the SEs - more the users.

Also thanks guys for the wider meaning. I think I'm rather ignorant to the tactics you can use online!

having 50 links on a page is not blackhat in itself.
it's more to do with how you go about doing it.

if you had them all written in tiny text, or coloured them so they couldn't be seen, or positioned them off the page with css, or... etc etc. that is blackhat.

a good test that everyone tells you is this: ask yourself if the links are there for your users or for the search engines. if they are there purely for the search engines then maybe you should take a second look at them.
doesn't sound like yours are though. so should be fine.