The default email address will "catch" any mail that is sent to an invalid email address for your domain. All mail that is sent to an address that does not exist as pop3 or forwarder will go to the default email address.
We strongly recommend that you setup Default Address to
(including colons on both sides of fail)
This will make your domain safe from dictionary attacks where spammers send millions of emails addressed to random addresses on your domain.
NOTE: This :fail: does not bounce emails. It rejects the email at smtp even before receiving emails i.e. when the sending server starts communicating with the mail server on your account, it asks to deliver email to a certain address. If that address does not exist, it will not accept the email. This way the email will stay in sender's (or spammer's) mail queue and will not leave it. So this is not a bounce and the doesn't put as much strain on the server.