In some catch-up news, Bloggers: Google 'sandboxing' sites at News.com from last month covers how Google engineers at the recent Search Engine Strategies conference finally confess that there is indeed a sandbox where new sites sit until they can rank well.
Google Sandbox Exists - So Says Google at Threadwatch is one source of the information, where member DougS said:
I listened for some time to one of the Google engineers expounding on all things search at Google. He said that internally they do not refer to the probationary period as the sandbox. They've been amused by the term, and have affectionately turned to calling the sand covered volley ball court in their quadrangle "the sandbox". He did, however, openly acknowledge that they place new sites, regardless of their merit, or lack thereof, in a sort of probationary category....
More of his comments are here, including how there are exceptions (as many have long assumed) that can spring a site out of the sandbox.
Oh Ye of Little Faith at SEOmoz is Rand Fishkin as the other key, earlier source. He writes:
We all shared the opinion that ranking new sites at Google was a pain since the inception of "sandbox" and Matt [Cutts, a Google software engineer] noted (this is a near word-for-word quote) - "OK, so it's really working. Even on you (guys)."
--and from another engineer--
He noted in words I cannot remember exactly that they felt it was having a remarkable effect on the quality of the index. We moved on to other subjects after this, but not before he was vehement in explaining to me specifically that they did not design it to affect "all new websites", but that a "filter must be tripped" for a site to be "boxed".
Postscript: Dave Naylor tells me a different story, that he felt the conversation Rand is talking about (Dave was also there) wasn't about sandboxing but instead new spam filters.