What is a Custom Recovery on Android?

Want to install a custom Android ROM — in other words, a third-party version of the Android operating system — like CyanogenMod? You’ll probably be instructed to install a custom recovery, too.
All Android devices ship with a recovery environment preinstalled. This recovery software can be used to restore the device to factory default settings, update its operating system, and perform other diagnostic tasks.

Android’s Stock Recovery

Android devices come with Google’s recovery environment, which is often referred to as the “stock recovery.” You can boot to the recovery system by pressing device-specific buttons as your phone or tablet boots or by issuing an adb command that boots your device to recovery mode. The recovery menu provides options to help recover your device — for example, you can reset your device to its factory default state from here. The recovery mode can also be used to flash OTA update files. if you want to flash a new ROM to your device — or re-flash the factory default ROM file — you’ll need to boot to recovery mode first.
The stock recovery is a minimal, limited system. It’s designed to be ignored, and it can generally only flash OTA updates and ROMs provided by the device’s manufacturer, not third-party ROMs.
android-system-recovery-menu

Custom Recovery Basics

A custom recovery is a third-party recovery environment. Flashing this recovery environment onto your device replaces the default, stock recovery environment with a third-party, customized recovery environment. This is a bit like flashing a custom ROM like CyanogenMod — but, instead of replacing your device’s Android operating system, it replaces the recovery environment.
A custom recovery environment will do the same things as the stock Android recovery. However, it will also have additional features. Custom recoveries often have the ability to create and restore device backups. Custom recoveries allow you to install custom ROMs. ClockworkMod even offers a “ROM Manager” app that allows you to access many of these features from a running Android system — this app requires a custom recovery installed to function.
clockworkmod-recovery-rom-manager-app

Popular Custom Recoveries

ClockworkMod Recovery (CWM) can create and restore NANDroid backups — backups of an Android device’s entire file system. ClockworkMod offers a ROM manager with a file browser that allows you to easily browse for and install custom ROMs via ClockworkMod Recovery and manage and restore backups. It also has other advanced features that will be useful if you’re installing and dealing with custom ROMs.
clockworkmod-custom-recovery
Team Win Recovery Project (TWRP) is a touch-based recovery environment. Unlike other recovery environments — including Android’s default stock recovery, which needs to be controlled with the device’s volume and power buttons — this recovery environment has a touch-based interface you can use by tapping your fingers on on-screen buttons. TWRP even supports themes. Like CWM, TWRP offers ROM installation and backup features the stock recovery environment doesn’t.
team-win-recovery-project-twrp-screenshot
CWM and TWRP are the two most popular custom recoveries, but other custom recoveries may be available for some devices.

When and Why to Install a Custom Recovery

These custom recovery environments are most useful when you’re installing custom ROMS on your device, as they provide backup, restore, and ROM-flashing features you’ll need. You’ll need to unlock your device’s bootloader to install a custom recovery on it.
Android does offer a way to create full device backups, although this feature is hidden and requires using an adb command. You don’t need to unlock your bootloader, install a custom ROM, or even root your device to create or restore a full backup.
Install a custom recovery when you’re messing around with custom ROMs, or if you really want powerful backup features. This is often seen as a necessary prerequisite to installing a custom ROM, but it isn’t always required. For example,  installing CyanogenMod with the CyanogenMod installer will also install ClockworkMod Recovery (CWM). Following installation guides for custom ROMs will often involve flashing a custom recovery, although you can flash a custom recovery and continue using the stock Android system if you just want those backup features.

source, HowToGeek
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