This site is completely legitimate; it simply hides the destination website from seeing the HTTP-Header-passed "referer" value.
In other words, it prevents the website from knowing which site you came from before clicking this link.
The site itself is clean. That said, some people may use it for unclean purposes (such as redirecting to a malicious website).
Anyone that pretends otherwise is misleaded and should not be taken seriously.
This site delivers a simple service and is not to blame for other peoples' acts.
Note: If I am wrong on any point, feel free to contact me.
This site provides anonymous referals, i.e. it connects you to another site without revealing which site refered you. I see here that some people have been refered to dodgy sites and therefore given this site a bad reputation, however this site is not responsible for the content on the refered site, it just mediates the connection. Google "href.li" to find out more...