Link Farms – Can Anyone Explain Sites Like This?

Take a look at at this site and then explain it to me:  http://myblog603.1greatblog66.info/

This is obviously some script that runs something that looks like a blog.  Somebody set this up for a purpose, and most likely that purpose is to feed links into “allinfo66.info”.  But how does this make money?  And how does it work?  How do they set it up in the first place?

The whole Link Farm industry is such a mystery to me.  But I’ve read articles claiming that domain owners are making upwards of $300/day with sites like this.  How???

I’ve got a few domains that have just sat around for years.  I’m not above setting them up to make make a few hundred bucks, but I have no idea where to start.