Every page you visit on the Internet will return something
called a 'status code', a code consisting of three numbers that
communicate to the requester the status of their request for a
particular page.
A 404 is ultimately an error message by default and is a very
frequent and recognisable message experienced by every single
internet user. 404s are not inherently bad, they exist for a very
good reason.
Their ambiguous nature however means that search engines (and
your users, and your rankings) will often benefit from some
direction on what action to take when they come across them.
Without this direction and left unmanaged, 404 errors are
problematic.
Here are the SEO impacts and the possible solutions.
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