Greylisting is a new tool in the fight against spam. What it does is temporarily block incoming mail from a sender. It returns the mail to the sender's mail server with a message saying try again later. The sending server must then retry sending the mail after the Block Period but before the Pass Period.
Greylisting is effective because spammers will not usually bother to attempt a second delivery, but legitimate e-mail servers will.
Greylisting is a very effective method of spam blocking that comes at a minimal price in terms of performance. Most of the actual processing that needs to be done for Greylisting takes place on the sender's server. It has been shown to block upwards of 95% of incoming spam simply because so many spammers don't use a standard mail server which will do automatic retries.