Device Firmware Update Mode and Recovery Mode
Atb Levy (via Clark Goble):
Both the DFU and Recovery Mode are very useful to install custom firmware, update, unlock or Jailbreak iPhone, iPod Touch or iPad. Entering or exiting from DFU or recovery mode depends upon the timing of pressing the Sleep and Home Button. Pressing home button for too long may lead to recovery mode instead of DFU mode.
You can also use DFU mode to downgrade the OS.
