At any given moment, our senses are being bombarded with sensory data. Consider sitting in a typical classroom. Not only are you watching your teacher write notes on the board and listening to her lecture, but you also must filter out a lot of sensory information in order to focus on the task at hand: the smell of pizza that your neighbor brought in, the conversation happening in the hall outside, the flickering lights in the back of the room, the sound of the guy behind you clicking his pen over and over, and so on. Thus, your brain must determine how much of this sensory data it needs to handle at any moment in order to operate at its best capacity.
Richard Gregory determined that your brain effectively handles this work because it can function in top-down processing. It thus takes the sensory data it receives (most of which it eliminates from processing from the start), combines that with information already stored there based on similar prior experiences, and comes up with a hypothesis about what the sensory data indicates.
Consider a typical drive to school or work. As you cruise along your typical route, you suddenly see a string of brake lights in front of you and your foot hits the brake as you think "There is a wreck ahead." You have not seen the actual wreck. You are observing many other things at this moment: your own speed, the cars passing you, road signs, the people at the bus stop. But your brain filters out they key information you need: Brake lights right in front of you. Based on other driving experiences, your brain makes a hypothesis, filling in missing visual information, based on this visual data you do have, and you react accordingly.
Another example is the Necker cube (you can search for this online) which is a three-dimensional cube with one side shaded in. As your brain seeks to make visual sense of this orientation, it will flip your perception of the shaded side forward and backward.
Top-down processing is one way to consider how your brain discriminates and processes the many tasks laden with sensory stimuli each day.