First of all let's define citation and co-citation terms:

Citation analysis was developed in information science as a tool to identify core sets of articles, authors, or journals of particular fields of study.

Cocitation analysis has been used to map the topical relatedness of clusters of authors, journals or articles...

Co-Citation Analysis and the WWW

Now, it's kinda a little confusing first, but we can see that it has to do with data/content relevance. Well, its not the news that search engines use citations as references and co-citations as indirect references to relate documents and identify their similarities. Jim Boykin explains it very easy comparing to bad (irrelevant) and good (thematically related) neighborhoods, where bad neighborhoods link to irrelevant (from yours) sites and you become relevant to them as opposite to good neighborhoods where other sites related to yours linked from the same source, so you're all part of bigger related theme that keeps each other stronger in their positions and relevancy. Check out the actual post for great advice - "Co Citation - understanding how it effects your SEO".