Grey text has appeared ahead of your cursor showing a completion you have decided against. Which description of the file's current state, together with the right way to move on, is accurate?

The principle — Cursor renders a Tab suggestion as grayed-out text ahead of your cursor. Grey text is a preview of a change, not the change itself. The document is modified only when you accept, and accepting is a deliberate keystroke.

Why the key is correct — Because nothing has been inserted, rejecting costs nothing: Escape dismisses the suggestion, and so does carrying on typing, which is why the feature does not interrupt a train of thought. This matters in two directions. Someone who mistakes the preview for real content will save the file and be baffled that the code is missing; someone else will conclude that the editor is writing into their files uninvited and turn Tab off. Both are avoided by reading grey as provisional.

Why the others are wrong — Selecting and deleting the grey characters would be necessary if they were in the buffer, but they are not, and attempting it usually deletes real code instead. Waiting for an autosave to commit them assumes the suggestion is part of the document on a timer, when an unaccepted suggestion never reaches the document at all. A pending queue that clears on a cursor move invents a rule the editor does not have, and it leaves the user hesitating over a suggestion that a single Escape would have cleared.

Remember this — Grey means proposed. The file changes when you press Tab, and at no other moment.

Sources — Cursor's Tab completion documentation.