Apologies for the long posts chaps, but here's a genuine riddle I'm hoping someone with black hat SEO experience/knowledge can help answer for me:

A quick spot of history: I started my business in 2007. Organic traffic grew steadily until 2012 when I suffered a Penguin penalty that promptly wiped me off the map.

Until that point I had reached a steady 1 or 2 spot in organic rankings for the keywords that exactly described my product and service, which, considering the market I'm in had around 12 competitors (at that time), and considering my site was built for humans, had no keyword stuffing, and so on, felt, well, justified.

At very minimum if you were in the market for what my product did a visit to my site was a great experience. The site was fast, easy to read, well laid out, the product rocked, and so on.

I stress those points as the penalty left me reeling. I had heard about SEO before sure, but considered it a gross exercise in unnatural manipulation -- I would never go down that road. Hell, it took me months to realize I had a "penalty", and then several more to figure out it was from this thing named after an arctic fish.

And yet here I was penalized, and where my question comes in. I have a few small pieces of information that may be relevant.

About a year before my penalty I started a blog covering general product announcements and other items of interest to programmers. These items almost never had links, and if they did, would be directly related to the subject mater. As a concrete example, I wrote a post about learning SSE in assembly, and linked to an Intel blog post on the same subject.

However, I did allow comments on this blog at first, and exactly two times I logged in to find spam comments linking to discount shoes or handbags. These comments were promptly removed, and, after that second time, I disabled comments altogether.

Fast forward two years into the penalty (yes, two years in!). It's mid-2014 and I've been researching what happened. Turns out at the time of my initial penalty I had well over a million "back links" pointing to my site. All were from incredibly shady sites. Chinese language pages with literally hundreds of "form posts", 99% filled with absolute gibberish text. But within that mass of garbage would be a link to my site, the homepage no less, advertising discount Louis Vuitton handbags. The link would generally be along the lines of (broken HTML intentional) href = "formboss.net" > Discount Handbags </a

At first the scam seems obvious: If my site had links pointing to knockoff handbag retailers, then my high Google rank would transfer over...wait...huh?

See, that's where I get stuck. I see the individual pieces, but I cannot piece the scam together in any way that makes scene. The Chinese sites that linked to me, who in the world would be reading those? Further, they linked to my home page. Short of being hacked (which I never was), how would a home page link make sense?

The short-lived links on my blog: Sure, they linked to outside sources, and so conceivably my high rank would valuable, but why the 1,000,000+ inbound links to my site?

That’s the part that keeps me awake at night. The thing I had control over, the outbound links -- Zapped ‘em immediately. The damage clearly came from those inbound links, but they make no sense to me.

What was the game I played for?