What does the discard all incoming mail option do?

The “Discard All Incoming Mail” option in the control panel is used to stop a mailbox from receiving email. When this option is checked on a particular email box the email server will start deleting all inbound email that would have otherwise been delivered to this mailbox. There are a few different scenarios when you would want to use this option.

Receiving email for an invalid mailbox
Some users like to use the “Catch All” email box option that allows them to receive all email sent to their domain that doesn’t match another mailbox name. If a user who has a catch all mailbox notices that a particular name gets nothing but spam email sent to it, for example sales@ when you have no sales@ email address. The user could then setup a new mailbox called sales@ and check the discard all incoming mail option to have all the spam deleted by the server. This allows them to still keep their catch all mailbox.

Getting rid of your spam
The spam filtering options in the control panel has an option to automatically remove inbound email messages. When that option is checked the messages are really bounced back to the sending party letting them know that they were over the spam score limit. This lets the spammer know that you had a real email address and he just needs to modify his spam to get by your filter.  Instead you could set the spam filter to forward the email to a mailbox that has discard turned on, and the spam would be removed with no warning to the spammer.