I think "word of mouth" just means opinions about products that are communicated to you via a network of acquaintances, acquaintances of acquaintances, etc. that is very unlikely to have any underlying commercial incentives. That communication can obviously still happen over the internet.
The point is that when you're looking for a toaster oven and your friend says that his coworker's spouse just got a ToasterGenius Model Z and they're happy with it, you can be fairly confident they're not shilling for ToasterGenius. They may not know anything about toaster ovens, and they may not have the same toasting needs as you, but at least you can probably trust that their opinion is genuine. Of course, I suppose it could turn out that ToasterGenius is running an MLM and your friend's coworker's spouse hosts ToasterGenius home parties to sell ToasterGenius products!
Not only you can trust the opinion is genuine, you can also gauge it.
You probably know your friend well enough to tell if they know anything about toasters or evaluating consumer products in general, and whether their views and needs corresponds to yours. So you rate the recommendation for ToasterGenius Model Z somewhere on the scale from "my friend is a bona fide toaster expert / fanatic", through "my friend toasts as much as I do and is attentive", all the way to "my friend doesn't know first thing about toasters, and also doesn't understand the concept of communicating uncertainty about one's beliefs".
This kind of ability is what makes word-of-mouth within your social network super useful. On top of that, if your friend ends up purposefully shilling for a MLM, they're doing that at the risk of immediately burning your friendship.
(Tangential: MLMs are social cancer that prey on relationships between friends and family members; they should be excised from this planet.)
The point is that when you're looking for a toaster oven and your friend says that his coworker's spouse just got a ToasterGenius Model Z and they're happy with it, you can be fairly confident they're not shilling for ToasterGenius. They may not know anything about toaster ovens, and they may not have the same toasting needs as you, but at least you can probably trust that their opinion is genuine. Of course, I suppose it could turn out that ToasterGenius is running an MLM and your friend's coworker's spouse hosts ToasterGenius home parties to sell ToasterGenius products!