DFU mode or Device Firmware Upgrade mode is a state that allows to restore any device from almost any condition. Users of iPhone, iPad and iPod Touch enter DFU mode mostly for firmware upgrade or change. In that state device can ‘talk’ to iTunes but doesn’t boot iOS or boot loader (that’s actually real difference between DFU and recovery mode). From DFU mode you can downgrade the existing firmware on your iDevice (downgrade iOS 5.1 to 5.0.1 or iOS 5.0 for instance), or put a custom firmware to your device. That operation can be performed for further jailbreaking or unlocking of your device.