When a Custom Element is responsible for a part of its child nodes, the usage of Shadow DOM is welcoming. Shadow DOM handles the HTMLSlotElement elements which can be used as placeholders. However, Shadow DOM brings a level of isolation which is not always welcome. Especially for the shadowified markup which relies on common stylesheets.
The built-in template engine provides a solution to handle Grey DOM. The purpose is to keep the concept of slot coming from Shadow DOM but in the Light DOM. Therefore, the DOM tree between the Custom Element node, and the slot node becomes a Grey DOM.
Basically, a Grey DOM can only be mutated from its Custom Element and, the Custom Element can only mutate its Grey DOM.
Moreover, like for the Shadow DOM, the Grey DOM handles kind of
<slot> elements to manage the placeholders.
For senior JS developers :), it is similar to the transclude concept implemented in AngularJS.