A drop registrar is a domain name registrar that exists solely to catch expiring domain names, for the purpose of selling them. Usually they work for a domain backorder service, and receive a percentage of the final auction price.
The major domain backorder services are: Pool.com (http://www.pool.com), Namewinner.com (http://www.namewinner.com), Snapnames.com (http://www.snapnames.com) and eNom Club Drop (http://www.enom.com/auctions/). Go Daddy (http://www.godaddy.com) also offers domain backorders, but they do not use a network of drop registrars (all of their registrars are owned by the Go Daddy Group, Inc.).
A nearly complete list with information on each registrar that catches expiring domains is available at Whois-Search.com (http://www.whois-search.com/deleting/who.php). Note that a registrar is not considered a drop registrar if they also sell domains retail or through resellers.