Google wanted to lessen the benefit for traditional SEO backlinking efforts, and for the most part, they did so. However, what they didn't realize is that most of the BEST sites use those same tactics to rank -- because for years it's worked and you've had to do that if you wanted to be on page one for just about anything commercial. So when they threw the switch on this update, those links got discounted, and tons of great sites disappeared from the results.
Leaving what? The guys who don't do any SEO, don't care about their sites, or aren't very professional in their approach to their sites. In other words, the low quality stuff that is out of date or out of touch has risen to the top of many queries. And, of course, the "big box" stuff that doesn't have to do much SEO because every time they sneeze they get another million links aimed at them via the media.
I wonder if Google is learning their lesson: almost all sites use SEO tactics Google doesn't like. If they turn off the effect of those tactics, they turn off the quality of their search results. "