Greylisting is a method of blocking spam based on the behavior of the sending server, rather than the content of the messages. It temporarily “rejects” or “bounces” unrecognized incoming emails that are not included in the receiving mail server’s trusted sender or white lists. 

The way greylisting actually works is this: each time your mail box receives an email from an unknown contact, that mail is temporarily rejected with a "try again later" message (which happens at the SMTP layer and is transparent to the email sender or receiver). This means that the message gets delayed until the mail sender sends it again.

If the incoming mail is legitimate, the originating mail server will try again to send it which will then be accepted and sent to your mail box. If the mail is from a spammer, it generally will not be resent. Mass email tools used by spammers will often not bother to retry a failed delivery as they send out large volumes of emails without repetition or electronic follow-up. 

It is important to note that the end user will only notice a delay on the first message from a given sender when greylisting is in use. Once a sender passes the greylisting test, they become a trusted sender. If a message is received from someone on the mail server’s trusted sender or white lists, then the message bypasses greylisting and is then processed by anti-virus settings and then delivered. 

To find out more about greylisting, view these links:
Whitepaper on Greylisting
Greylisting Entry at Wikipedia

Article ID: 8, Created On: 3/18/2011, Modified: 3/18/2011