The dreaded "404 File Not Found" error page is one of the great frustrations of the online world. No doubt that it must be a close relative of the "no longer in service" recording for phone numbers.
While they are important for visitors already on your site, they are even more important to visitors coming in from other sites or search engines. These visitors may be entirely new to your site and haven't really "invested" in your site yet or realize what a great site you have. Without a good 404 page, the back button appears awfully inviting.
404 pages may not seem like a typical SEO topic, but they are very important and even the best website will end up with a few 404's in its life. What many site owners don't realize is that there is some significance behind the "404." The 404 is actually a specific server code message, and the reason it is important is that a proper 404 instructs search engines that the page is no longer available and should be removed from the index.
Some content management systems and e-commerce systems allow you to designate a page to use for 404 errors, but the page actually returns a 200 (Ok) code instead of the proper 404 error code. The only way to know though is to look at the header status message that is sent along with the page, which you can do by using "View Response Headers" from the "Information" menu if you've installed the Web Developer extension, or use an online header checker like the one from Rex Swain (just enter the URL of your error page).
One of the benefits to the web is that the 404 doesn't have to be a cold, harsh message. The best 404 pages will try to help the visitor by recommending related pages, providing a search form, or at least a link to the home page or sitemap. But along with that, it can also offer a chance to lighten the mood a little.
Below are some you might find amusing, and you can also find a collection of 404 pages at Smashing Magazine.
I bet you never imagined that you could take something as dry as a 404 page, and not only dress it up and make it fun, but turn it into an opportunity for user generated content (UGC). Which also clearly makes great link bait! Well the folks at Dailymotion did. You can see how they've implemented their 404 and invited others to participate, and spend some time in their 404 gallery. Who knew 404's could be fun and entertaining!
This is an area though that has really been overlooked. Many companies that could really have fun with this have missed the boat, and there are even some that don't even have a basic, custom 404 error page in place.