The wikipedia article on Google Bombing is enlightening. So Google Bomb is the process of linking to a certain page with a misleading link anchor text e.g. a competitor linking to your site with the link anchor text as "bad seo". If enough people had that link on their site it would get you higher up in the SERPs for the term "bad seo".
It seems to be a way to do practical jokes or damage someone's reputation.
Hidden behind the term is some real seo... it's good to have links (internal & external) pointing to your pages whose anchor text include the search terms you'd like that page to rank highly for. If Google sees a lot of people linking to a page with certain terms it will assume that page is related to the terms.
There's no algorithm to implement, that's for Google to do