When someone visiting on your website through external URL or any other resources and visitors do not find useful information related to search text or content related to a url, that page called 404 pages or page not found page.
In simple language what a page visitor view when they try to open non exists page or url called 404 page.
404 page is most important page for website. There are few reasons of 404 pages:
- Someone try to open non existing url through external resources.
- Your website have some links which do not exists in your website.
- Someone trying random url though your website url.
In case if user do not find related information on your 404 page, so user will never return to your website. To keep busy visitor on your website you should have good content on your website but 404 pages should have some good content related to current URLs. So user will feel that your website is helping him to find what he searching for your website. So User friendly 404 pages are good options for your website.
For user friendly 404 page you should add some links of related content with good search option. So visitor will visit on other pages or search another things through search option.
Google does not penalty for 404 pages but you should keep visitors busy on your website so for a good user friendly website 404 page play an important role.
Somebody design 404 pages with amazing graphic and some nonsense text but these things does not help to your visitors. Unfortunately they will search for other options.