In San Diego, some major sewer trunks are intercepted and sent to water reclamation plants. Processing plants which were built at the cost of hundreds of millions of water. The water is processed to a standard which as I mentioned is actually drinkable, but is not treated as legally drinkable. That water is sent back out throught the PURPLE reclaimed mains, and is used for landscape watering in public right of ways, golf courses, and is available in many areas for a builder or homeowner to tie in a landscape watering system. Every exposed pipe, valve, sprinkler head, etc. is color coded purple, indicating non-potable.
Gray water is if you collect the lav sinks and tubs from your house and use that untreated. Note that KITCHEN water is considered "black" water, like the toilet.