Have you ever wondered what happens with your water once it makes its brief passage through your house? Not the water that resides in your toilet, but the water that you shower or wash dishes with. Water that is not potable, but also not heavily contaminated with chemicals or your bodily waste (ewww). Couldn't this water still be used for certain functions like garden watering or heading back to the toilet (as long as you don't let your dog drink out of it)?
That's exactly the purpose of Greywater Recycling: re-using water that isn't fit for drinking, but can be used to irrigate lawns or flush toilets. As our population continues to expand exponentially, our static supply of water is going to continue to be strained, which is why we are going to have to find smarter ways of using that water.
Whether it is energy or water, our job is to find wasteful ways, and figure out how to increase the efficiency of the system. Why do we use perfectly clean water in our toilets? Couldn't that water be water we just took a bath in or washed dishes with (after some basic cleaning with a Greywater recycling system)?
Here is a link from Green Building Supply on a Brac Greywater System. It has a helpful diagram to help you visualize how it works.
Greywater recycling is a perfect example of finding a more efficient way of doing business as usual!