Well many people who are not interested in link exhange or buying links try this method to get some link backs from different free blogs and services which allow free website creation.What is good in it,well you get links from matching content and you can carry it on according to your will.You can also exchange links with other people so that it become more dense.

Google knows it all : yes search engine knows it very well as they are not stupids.They track websites and blogs on regular basis and it is done through automated algorithms to detect them.Though it is not illegal to do it but might hurt your website rankings.

So if you have some plan or already doing this rethink and make better plan for it rather then making a new subdomain every time thinking i will make 100 sub domain then link it to my blog etc etc.The major mistake which the people do is making duplicate content for those blogs which they are creating on free webservices like blogspot,wordpress,blog.com wikispaces,hubpages,wetpaint,and others.Google recognizes the motto of blog creation and just leave it as it is.

Better involve with other people also make community and also ry to brand your website.