Spammers frequently take advantage of a catch-all email set up on Web servers. A catch-all email account will receive every email sent to nonexistent addresses. It is unwise to use catch-all email accounts, and spam sent to nonexistent addresses should be discarded. Spam can easily clog up your SMTP server and consume resources like bandwidth and disk space in mailboxes.
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Most mail servers and Web hosting control panels like CPanel enable a user or admin to decide what will happen to emails with no existing recipient on the server. An admin can refuse to let emails onto the server, let the sender's mail server deal with it (option: ":fail:") or to accept these incoming messages but then to delete them right away (option: ":blackhole:").
The best of these options, for the health of your mail server, is :fail:.
The :blackhole: option accepts everything sent to the domain mail server and then throws away email addressed to nonexistent accounts. This option uses the full amount of bandwidth, and also requires that the server read and write messages to disk before they are deleted. Multiply this by 1,000-or-so messages a day and you can imagine the impact onto your server resources.
A nonexistent email address from your domain may be spoofed to send out SPAM messages that may even carry viruses. Most of these messages will bounce back and hit your mail server. Your Web server would have to deal with thousands of attachments at once. And this would unquestionably impact your performance.
The :fail: setting stops emails addressed to invalid recipients from entering the mail server in the first place. The mail server will reject each message during the SMTP handshake conversation - therefore the actual email message will never make it to your server, and the sender's email server will have to deal with the stuck message.
This option is also more effective in the case of legitimate email in which the sender has actually misspelled the recipient's email address. In the :fail: case, the sender would receive a bounce message informing him that the domain could not be reached, enabling him to correct the error. Depending on your hardware - a server can handle many more :fails: than it can :blackholes:.
