A Pothole uses 'hidden' links, phrases linked to pages whose actual titles may not appear in the text. This is okay when done correctly, allowing links to relevant articles without disrupting the narrative flow.
Sinkholes occur when potholing goes wrong, featuring links that are irrelevant, inappropriate, or both. In a wiki, it's better to pot hole words which represent the article they are linked to. Here are some bad sinkhole practices:
Misleading links: Consider Mark Hamill, who both portrayed Luke Skywalker in Star Wars and voiced The Joker in the DCAU. In an example about Star Wars, potholing Mark Hamill's name to The Joker like this:
... creates a sinkhole -- the fact that he voiced The Joker is completely irrelevant to his role in Star Wars. (More importantly, he has a page, so potholing his name to another page gets odd.) The reader has to maneuver around the sinkhole to avoid being knocked off track. It adds nothing to the wiki except the likelihood of confusion. Such sinkholes should be excised with extreme prejudice.
Chained sinkholes are particularly annoying: these are when pot holes are chained with sinkhole characteristics. There's only one sentence, but many pages linked to. Instead of proper structuring, careless editors divide the sentence to equal parts and link each part to the articles. That way we'll get mess that turns nearly the entire sentence blue like this:
The reader has no clue there are multiple links there. If they do discover all the links, it is a pain following all the links. Don't do this, please.
Covert Opinions: Too many times sinkholes are used to bury a subjective trope in an example or description. These are bad. If you see one of these, remove the unnecessary links and/or restructure the necessary ones.
Linking a Common Phrase to a Trope of the Same Name: For example, linking a statement that someone "got better" in some way, shape or form to the trope I Got Better. That is part of why the trope was renamed to Unexplained Recovery.
See Also: Weblinks Are Not Examples, for more on how to avoid using links irresponsibly.