What is your understanding of the latest Panda update in relation to back linking?
 

Explain please............

First remember it is not Panda update but it is called as penguin update.
It mainly prefer to having high quality back-links which are from high page rank web sites.

I believe that Panda is not so much focused on backlinking, but more about over-optimization of on-page content and the over-use of content farming

Yes, Google latest update is penguin update. In which Google banned or ranked down those site which create web spam. They doing wrong thing to optimize website like duplicate content and over optimization.

You must cleared that it not panda update but remember Panda is old algorithm for google now google made new update and it is called Penguin update.

According penguin update you must follow white hat seo technique and You must used high quality content in Off page activities and must do off page activities in High page rank dofollow sites for getting best back links.