"Listening to gossip can be likened to receiving stolen goods; it puts you in immediate collusion with the person conveying the gossip to you." - Joseph Epstein in the book "Gosssip."
Gossip is primarily negative. Its objective is to tear apart those who aren't present. If it were in print or posted on the web, of course, most of it would be classified as slander or libel and the spreaders would be hauled into court.
But dishing the dirt just among a few friends, colleagues, or even superiors (no higher-up can pass up a tidbit even if it means slumming) often does such a comprehensive job in character assasination that it should be against the law. What makes the situation worse is that the more vicious the attack, the higher the probability that the material will be passed along, rapidly. Since gossiping entails performance art in that process of telling, there will also be embellishments.
The amazing part is that the most active participants in gossiping rarely reflect on the reality that when they aren't in the circle their professional reputation is likely being reduced to junk status. Another odd feature of gossip is that the pull force continues, perhaps even intensifies, after the parties leave the group. Lawyers I coached who hadn't made partner and were exiled to the desert of underemployment maintained for years an alumni network so that they could keep up on matters at their former employer. Their current relationships with one another were irrelevant.