The Buzz

Co-citation actually has been around for long time. Many have discussed it, I am not sure what's the name was. But, it's been recently mentioned by Rand Fishkin of SEOMoz and started the buzz. 

Source: http://www.seomoz.org/blog/prediction-anchor-text-is-dying-and-will-be-replaced-by-cocitation-whiteboard-friday

What it is? 

As per my understanding: It is a link qualifier in Google Algorithm that gives more SEO scores to pages that refer to relevant stuffs, rather than so many random stuffs. If a PR 4 backlink that has links to your site (your site is about containing sunglasses) and if the backlink also link to prescription drugs, then Google will associate your site with prescription drugs, not sunglasses. But, you will get more SEO score for ranking if you get link from PR 1 backlink that points to many Sunglass related links. 

Links

Jim Boykin has nice description here:http://www.internetmarketingninjas.com/jim/co-citation-understanding-how-it-effects-your-seo/

Hubshout video is also good on telling what Co-citation really is: http://hubshout.com/?Video-Tutorial----Co-Citation&AID=825

What to do?

So, get out from the concept of getting high PR links. Get referred from relevant links. Google has been using votes from backlinks as strong signal for long time. But, they are also seeing whether these votes are also qualified. And that's why co-citation is important for them.

Source: https://www.facebook.com/groups/bimpa/doc/482598961804409/ (check link for updates)