Greyscale Printing is a multi-level printing with the use of a greyscale print heads. These printheads are especially produce to spray multiple dots in just one place. Usually greyscale printheads have smaller dot size than the regular print heads (binary print head). When we say greyscale we said different levels, like for example we have an 8 level greyscale printhead so this level is from 0-7. When we have a 6pl print head, this means that a gresycale printer can print up to 42pl dot size. How this 42pl dot size can be attain? A dot size is only 6pl so it needs to spray 7 times to attain the 42pl drop size in a nick of time, so when you have 30pl drop size it will spray 5 times to attain this size. Imagine the text "a" - the round edge of that creates a pixel that sometimes cause the crispiness of a text. When you have a greyscale print head the edge will look more crisp than the binary printhead.
With this effect the resolution of the printer doesn't matter anymore. A binary print head with a resolution of 300dpi will output a visual resolution of 300 dpi. But a greyscale printhead with a resolution of 300 dpi will output a visual resolution of 900 dpi, that is a big difference in output.
That is why a lot of digital printer manufacturer turns to greyscale print head since it gives more vivid and crisp image than a binary print head. This type of technology usually uses a UV Curable Inks. Greyscale can be applied to POPs, Ceramic Tile Printing, Barcode Printing, CD/DVD Printing and other printing that require smaller text or more finer gradients.
With the help of Greyscale Print Head, there are no need to add another 2 colors, usually binary print head add another color the Light Cyan (LC) and Light Magenta (LM) this will create more finer gradients especially to skin tones. But now with greyscale we can eliminate those 2 colors and thus save inks and save printheads.
In summary when you have a binary heads with 4 color (CMYK) you will just get a 4 plain color. and with the introduction of the Greyscale with 8 levels each head that means 7 different shade of color a head X 4 heads you will get a 28 color printer.