Nofollow refers to an anchor link on a webpage that has the following attribute attached to it:
rel="nofollow"
So if you were to inspect the source code of a "nofollow" link you'd see the following:
<a href="www.randomwebsite.com" rel="nofollow">Random Website</a>
It's basically a signal to search engines not to count it as part of a website's link profile. It was designed to stop spammers.