For an employer, that means making sure they're not coaching candidates too much. I once learned a recruiter had coached a candidate so much that their resume was highlighting skills that were actually very weak. They even noted words we'd used a lot in explaining the position, and coached the candidate to use these words in stories. No one outright lied, as far as I could tell, but the recruiter was going a little too far in forcing the fit.
Potential employees need to watch out, too, because the recruiter doesn't really care if you're going to be happy or fulfilled in the position. I've also used recruiters to find jobs, and they helped me find a really great position once early in my career. The recruiter kept trying to get me in to interview for positions I didn't want. He'd say, "just check it out and see." Sorry, no. Make it clear you're not going to waste your time if it doesn't move you in the direction you want or offer the pay you demand.
Recruiters are often maligned on HN because of Linkedin spammers, but I think that's a minority of bad recruiters making more noise than everyone else. My view is that they can be a useful channel as long as you do your homework and know what the recruiter is doing.