To downgrade is to use specially-developed homebrew software (a downgrader) to return a PSP's firmware to an earlier version.
As of this writing (summer 2009), there are downgraders available for firmware up to 5.03. Different firmware versions (and in the case of the TA-082 motherboard, different motherboard versions) require different downgrade software. A downgrader for firmware 5.5 is in development.
Downgrading a PSP's firmware to version 1.50 allows all homebrew programs to run on the system. Only some homebrew will work on versions higher than 1.50.

