With this post by John Scott at Cre8asite, we now have a new and deeper insight into what this "sandbox" theory is all about.
To give credit to his testimony, John Scott provides a source who happens to be a fellow worker of Krishna Bharat at a company other then Google.
John says, "The probation does not apply to new sites. It applies to links. When the algorithm was deployed certain older links were grandfathered in. After that, links will be (are being) given partial credit, and be essentially on "probation"."
John continues to explain:
It applies to links, not sites. And the age of the link is not the only factor. The IP range of the links and other considerations are made, and the person who I discussed this with said that Krishna Bharat is at Google primary to develop and implement this new algorithm. It is supposed to radically change the way links are evaluated.