After reading the vignette (https://bioconductor.org/packages/release/bioc/vignettes/DiffBind/inst/doc/DiffBind.pdf) I still have doubts on how grey lists are derived in DiffBind ? Could someone please explain to me how they are calculated. Thanks

DiffBind invokes the GreyListChIP package to generate greylists, you can read the documentation there.

Basically, it counts control reads in overlapping bins, estimates size and mu parameter values to fit the read counts to a negative binomial distribution (using stochastic sampling), and marks outlier bins (based on a p-value threshold) as "grey". This is a similar process to that used to generate the ENCODE genome blacklists (which additionally involves hand curation).