By now you should be familiar with the various SharePoint components such as the ribbon, the Site Actions menu, and the context menu that appears in a list (more accurately the Edit menu). All these components represent various important tasks within SharePoint and form an indispensible part of the SharePoint user interface. These are also the components that you may need to modify or add to when customizing your SharePoint application.
SharePoint provides a rich, consistent, and simple mechanism to customize these components through custom actions. According to Microsoft a custom action represents a server ribbon, menu, or link customization that a user can see.
By the Way
Custom actions can be bound to a list type, content ...