Here's what Google says:

From now on, when Google sees the attribute (rel="nofollow") on hyperlinks, those links won't get any credit when we rank websites in our search results.

Here's what MSN Search says:

Any link with this tag will indicate to a crawler it is not necessarily approved by this page and shouldn't be followed nor contribute weight for ranking.

Here's what Yahoo says ... well, Yahoo doesn't exactly say what their search bots will do with the link, just that it means that the link is not necessarily trusted by the site owner.

The 6A announcement says that the tag will :

... alert [Google's] search spider that a particular link shouldn't be factored into their PageRank calculations.

The MT nofollow plugin page says:

This initiative, with announced support from Google, Yahoo, MSN (and surely more to come), will direct search engines to ignore links with this attribute set for the purposes of spidering or increasing search engine relevance or ranking.

There's two very different effects being described here.

1. Search engines will not count links with the nofollow tag in page ranks.
2. Search engines will not spider through links with the nofollow tag.

All the sites agree on #1, but effect #2 is not explicitly mentioned by Google (or by the 6A announcement). To my mind, #1 is what we're particularly combatting here; #2 is a somewhat less desirable effect, though nothing that's going to break the web, by any means. It's just interesting that there's no clear-cut description of how the search engines are actually implementing this.

Oh, and about that "untrusted" thing -- wouldn't it be an interesting variation on the nofollow plugin to have it not take effect on a certain class of commenters, e.g., a whitelist or Typekey-authenticated, or something like that? That might alleviate some of the "doom, doom, doomity-doom" chanting I'm hearing over this issue.

UPDATE: Jay Allen posts on it (and says, "search engines will ignore those links for the purposes of ranking (e.g. PageRank) and will not follow them when spidering a site"). But does he know? Or are different search engines treating it differently? As usual, though, his comments/trackbacks are the most interesting bits there (nofollow or not).

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It's interesting that you should mention the idea of having the plugin ignore authenticated comments or a whitelist as that's exactly what the ExpressionEngine version of the plugin does allow. :-)

So it appears that someone out there is listening to you, Dave. Just a shame it's not Six Apart.

I suspect that will be the next refinement. The 6A folks I've read have noted that the plugin, as it stands, was a quickie job.