Google is very clear that this is an advanced tool for “Power Users” and not something that everyone needs. People should be careful messing around with it.
Some key points:
It is very important that you first determine which links are bad – you don’t want to accidentally remove links that are valuable to you. If you have to “reavow” links it takes even longer and the link could lose some of its initial value
Google considers your disavow submission “a very strong suggestion” but not a definitive they have to abide by.
Disavowed links are submitted via a file that you upload to Google. There is only one file per domain name, so if you have multiple people managing your domain name, be very careful that only one file is used or you could wind up messing up links that you’ve already disavowed.
Links that are disavowed are treated by Google like a nofollow.
Google says it may take weeks to process.
Google strongly advises you to still attempt to manually remove links first by reaching out the site owners.
If you do a reinclusion/reconsideration request, and have disavowed links, Google wants you to note that in the request so they can cross check things.
You can remove either a precise URL (example: http://www.url.com/page.htm and it will disavow links from that page only) or you can disavow links from an entire domain by putting domain:http://www.url.com. Be sure you only put one URL per line.
You can include comments on a line on their own by prefacing with a #
Google hasn’t said whether there will be a limit to the number of links you can disavow, but you can bet that if people starting abusing this (getting bad links to boost rankings and then disavowing them before there are penalized), Google will have to put restrictions in place. So as not to ruin what is a great feature: DO NOT ABUSE THIS.
For now there is a file size limit of 2MB (and there is no way you should need to disavow so many links that your file size exceeds that).
The tool is live and can be found here: http://google.com/webmasters/tools/disavow-links-main
You need to be logged into Webmaster Tools. You will see your domain name listed, and you click the red button to disavow links. You’ll see a warning and then you click again and then a box pops up so you can upload your file.
NOTE: If you are an EcomBuffet client, we do not advise you to do this without speaking to us. We are partnered in your SEO campaign and don’t want you taking actions that we aren’t aware of that could hurt the campaign. If you want to discuss this and make a plan for disavowing links, let us know!