It's a joke reference to a hypothetical apocalyptic scenario based on endlessly self-replicating molecular-scale robots that absorb all available resources.
Since molecular robotics hasn't really taken off, the term "nanotechnology" has morphed into a catch-all term to refer to any devices that utilizes the unusual physical effects of really small structures. These unusual physical effects become the most interesting in the nanoscale regime, of like 10's or 100's of atoms. When you get this small, the typical assumptions for various materials break down and aren't quite as valid anymore, basically. Not as exciting as grey goo, I guess.
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