Microsoft Knowledge Base Article 310356 contains the following summary:

This step-by-step article describes how to prevent mail relays in the Internet Information Server (IIS) version 5.0 SMTP server. IIS 5.0 includes a full-featured SMTP server. You can use the IIS 5.0 SMTP server to receive and relay e-mail messages to other SMTP servers on your network or to servers on the Internet. The relay function is helpful for internal network clients that may need to forward mail to other SMTP servers and for IIS programs that need access to an SMTP server to forward mail.

When the IIS SMTP server relays e-mail messages, it may forward mail that is addressed to any e-mail domain. This feature allows the IIS SMTP server to forward mail to any internal or external network SMTP server for which is can resolve an MX record. However, if the IIS 5.0 SMTP server is accessible to Internet users, mail relay is undesirable because unscrupulous users can forward mail to your SMTP server to distribute unsolicited commercial e-mail to large numbers of computers. This can have an very adverse impact on available bandwidth for your internal connection, and cause your mail server to be placed on "black hole" lists of open mail relays.

For a user or computer to relay e-mail messages through an IIS 5.0 SMTP server, the following two conditions must be met:

The user or computer must be able to access the IIS 5.0 SMTP server.
The IIS 5.0 SMTP server must be configured to relay e-mail messages to other domains.