According to this question on Meta.StackOverflow:

Changes to the question will now notify users who have favorited the question. Notifications include comments to the question, edits, new answers, and edits to answers. This is a way to get updates on questions that you yourself didn't ask.

The answer does not explicitly state where the notifications appear, although I assume they would appear in my Stack Exchange inbox. However, I have not once received a single notification for any of the questions I have favorited.

Cross referencing my inbox and favorites, I can confirm that there are no notifications for any activity from my favorites.

So, where are these notifications supposed to appear? Is this feature broken?

It's the same for me. Edits to my posts also aren't in the inbox. I need to go to my user profile (clicking my user name), and the tabs (e.g. responses, favorites) have number tags informing me of "unread messages". – Daniel Beck Dec 20 '11 at 6:15
I'm totally adding this to my favorites so I don't get a notification (yup, doesn't work for me either). – slhck Dec 20 '11 at 9:50
up vote 4 down vote accepted

We had to pull that for a bit while we figure it out. See my comments here:

Please get it back soon – aitchnyu Sep 14 '12 at 6:30

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