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A link monkey is someone who is told by an SEO to gather backlinks and do all the busy work. So they do, and they can do what they do good, but they don't really understand why it is they're doing it as they don't understand a whole lot about SEO other than what they're told to do.
A code monkey is a somewhat inexperienced programmer who can bang out rudimentary code and all the tedious stuff instead of be innovative with their own algorithms.
Like I said, monkey see, monkey do. widget monkey is the inexperienced guy in the industry who is told exactly what to do, and so they do it, and they do it just fine.
I don't see it the term as entirely derogatory, although it does imply a limited skillset to me. It's the "monkey" part that has the negative impact. A link monkey can be part of a site development effort along with copy writers, PHP coders, graphic artists, etc. Oddly, we call link developers "link monkeys" but we don't call copy writers "word whales" or graphic artists "pic pigs".
Personally, I like "link ferret" better than "link monkey", but just calling them "link developers" would put their status on the same level as other specialist functions.