As often happens in the wake of a major algorithmic update by Google, shockwaves have been sent across the web and some websites may find a drastic drop in their rankings. The aim of this Google update was to combat sites that were Google believes were spamming them in order to rank higher, such as:
· Aggressive exact-match anchor text
· Overuse of exact-match domains
· Low-quality article marketing & blog spam
· Keyword stuffing in internal/outbound links
Over-use of Exact-Match domains means buying several domains that contain the keywords you wish to target and then not actually using those domains to host your website, but rather re-directing visitors from there to your main site, or just using those domains to link to your main site.
Blog spam means having lots of articles written by blog networks, the content of which is purely written for SEO purposes and to link to your site, where the actual content on the articles not very compelling or useful.
Firstly, check out this article about the Penguin update that explains in more detail what Penguin meant for webmasters.
The following article also goes into some additional detail about the meaning of over-optimisation.
This SEOmoz article Penguins, Pandas, and Panic at the Zoo advises the steps to take to assess if and how badly Penguin has hit you.