This is a new idea born among webmasters to gain popularity for their blogs/web page. As you all know getting attention is an old trick, weather in real life or online. Politician uses this often to stay in limelight. This same rule applies to link baiting as well.
There are two different flavors in link baiting idea. Good and bad. Good ones are those to create news first like exposing scams and create news, which will surprise everyone. Bad ones are those you create a controversy or attach some leading personalities in your blogs. Think that you are trying to gain traffic not really hurt anyone. These kinds of tricks or ideas will bring in 1000's of website/blogs linking to your site.
Link baiting idea is a blackhat technique that's why most webmasters think it is not legitimate to use it. But the effects of link baiting have profound effect and gradually drive traffic to your blog or site. If implement properly it can draw huge links with minimum effort from your side. Some link expert's call that "hooks" http://performancing.com has mentioned the 5 types of "hooks" as News, Contrary, attack resource and Humor.
Matt Cutts the Google Engineer in his blog about SEO advice has mentioned "LinkBait" as something interesting to catch people's attention. He say's Linkbaiting is not a bad idea. So creating attention is the key to that also person should be creative in his thought to get that idea into place.
You might all have heard of Alex Tew of http://www.milliondollarhomepage.com he created an idea to raise a Million $ to raise funds for his college education by selling 1 pixel for a $ on his website. After four months he accomplished the task. This is the kind of news you should create to get attention. His site was also mentioned in CNN News as well. After his idea there are 100 of sites mushroomed over the web like one cent pixels but they are not gaining to achieve the results Alex could drew to his website. So be first to create news before it gets crowded.
Actually the term "linkbait" was started by Aaron Wall of SEO book in his post way back in August 2005. He says in his post that if "you are in a field that can't build links naturally create linkbait". By creating something on your web site that's funny, controversial, informative, or creative, it will gain natural links—which is the key to top search engine rankings. Andy Hagan's has come up with an idea to throw a contest to get links. The idea is simple give Andy a link baiting idea and if that works you will earn $1000 for that. He has posted that on BizNicheMedia.com blog. So his idea for a contest itself is an example of link baiting.
And generating information or ideas that people talk about is a surefire way to generate links.
