Originally these shortening services were used to shorten urls so you could fit them into text based emails.
Now with twitter and other social networking services people use these services to limit the amount of text in a message they send out.
A common service nowadays is bit.ly and what people will do is automate the task of posting blog post updates to Twitter and facebook by using Twitterfeed, Networked blogs, and other services that are configured with a bit.ly account.
The automation task sums of the blog post in a couple sentences and links to the original article using a shortened url like so: http://tx.cm/web-hosting-companies
Bit.ly uses a 301 redirect which is what you want for SEO although other services use 302 / 307 redirects and others cloak the redirect (bad, very bad!)
Bit.ly can be trusted but you can also create your own shortening url service by installing a wordpress plugin on your site called “pretty link”
