Bounces are undeliverable emails. They are usually separated into two categories: hard bounces and soft bounces.
Transactional Email uses a specific set of heuristics to determine whether a bounce should be classified as hard or soft. Typically, permanent errors like non-existent mailboxes are classified as hard bounces, while quota errors and other temporary issues are treated as soft bounces.
Mandrill handles bounces and reports them automatically in your account.