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In the past, I used to see those websites that were in the same Dmoz category as my website. I'm looking at these today and they really don't make much sense to me. The Google definition is:
Pages that are similar to your site - uses the related: operator to return a sample list of pages that we consider similar to your site.
Should I be worried about the results of the related: command? Is anyone else seeing strange results since Big Daddy rolled out? Is there any "trick" to helping Google figure out which sites are actually related to your site?
And now, although they have nothing in common, Google thinks that her site(s) are related.
I also observed that the number of pages containing a particular backlink is a critical factor in determining "related" pages. I just checked my related pages, and I saw that all related sites have more than one page with a backlink to my site, without exception. Even some directories are counted as related, as they have multiple pages (under different categories) with a link to my site.
But this is an isolated observation, and needs confirmation to be generalized.
I'm seeing this too. For example, several of the "related" sites are where my RSS feeds are located. To say my site is similar to a site that publishes RSS feeds is silly.
If many sites link to yours, you might also see other site that the sites linking in to you are linking to.
(How to make sense of this?)
Your site: A
If B, C and D links to your site and also link to X and Y, then X and Y will be seen as related to your site. (A, B and C might or might not show up as related though, unless they have good PR.)