Though the word Sandbox sounds pretty pleasant, it is probably best to think of it as a type of quicksand. When a new site is indexed in Google (made live and submitted), if the SEO has been done correctly it may be initially propelled to the top of Google search results for a short yet glorious time, but then, slide downhill only to be buried deeply in the "sand" at Google. In other words, Google's Sandbox is about a brand new website being placed on probation, and then kept lower than expected in searches, before being given full value for its incoming links and content.
How does it affect the website?
The Google's Sandbox is like a filter placed on new websites to discourage spam or poor quality websites from appearing on ranked searches - sites in the Sandbox do not receive good rankings for their most important keywords and keyword phrases, no matter how original or well optimised the content is and how many quality inbound links the site has.
Which types of websites are vulnerable to be mired in the Sandbox?
While all types of sites can be placed in the Sandbox barring a few exceptions, the problem appears grave for new websites seeking rankings for highly competitive keyword phrases. More competitive keyword driven websites seeking rankings in highly competitive searches are likely to be in for a much longer duration.
How long does a site remain buried in the Sandbox?
A hiatus in the Sandbox varies from one to six months, with three to four months being the average time frame for a new website. It has been observed that less competitive searches are given a much shorter stay, whereas hyper-competitive keywords often get stuck in the sand for six months.
What distinguishes sites trapped in sand and a Google penalty?
Sandbox is a Google-only event. Many folks, seeing that they have good rankings in Yahoo and Bing, mistakenly believe that they have triggered a Google penalty. However this is generally not the case.
Sites penalised by Google do not appear in the Google search engine results pages for even the less important searches. Moreover, sites which have invited the wrath of Google show no page rank, and have a grey bar on the Google Toolbar. None of this is true in the cases of sites mired in the Sandbox.
Google is looking ahead for websites that offer quality content. It is an effort to prevent spammers from creating websites that are just a flash in the pan, and to discourage the violation of Google's Webmaster Guidelines.
Adding powerful incoming links, with strong link anchor text, and adding relevant and rich keyword, and fresh content will help your site rise from the Sandbox, sooner rather than later.