Back in the dark days of SEO, webmasters and SEO agencies would use reciprocal links to boost their search rankings. They could do this without any fear of their rankings suffering, because the quantity of links is what mattered the most.
However, such link schemes and agreements were quickly and openly abused in order to manipulate search results.
That’s not to say that all reciprocal links are bad. For example, if there are two authority websites in the same industry, it is likely that there will be some natural linking between the two. Natural linking is the key point here; it’s easy for Google to tell the difference between reciprocal links where sites are linking to each others’ high quality content, and those which are blatantly part of a scheme to try and manipulate search results.