A rule is a set of conditions, actions, and exceptions that tells a system how to react to a particular situation. In Outlook, rules help you manage your e-mail messages by performing actions on messages that match a specific set of conditions. After you create a rule. Outlook applies the rule to all your incoming or outgoing e-mail messages. For example, you could create a rule that:

• Forwards all messages that are sent by a specific person to another user.
• Assigns a category to all messages that you send that have a specific word in the subject box.
• Higlights each meeting request or meeting update that you receive from a particular person.

Types of Rules

     There are two general types of rules :

• Notification Rules - Alerts you when you receive a message with particular characteristics. For example, you could create a rule that automatically sends an e-mail message to your mobile telephone when you receive a message from a family member.
• Organizational rules - Perform one or more actions on a message. For example, you could create a rule that automatically moves certain messages to a specific folder, or you could create a rule that automatically highlights meeting requests that you receive from specific senders.

Server-based and client-only-based rules

If you have an e-mail account on a computer running Exchange Server, the server can apply rules to your messages even if you do not have Outlook running. These rules are called server-based rules. Server-based rules must be applied to messages when they are received in the Inbox on the server, and the rules must run to completion on the server. For example, a rule cannot be applied on the server if the rule specifies that a message is delivered to a folder that only exists on the client. If a rule cannot be applied on the server, it is applied when you start outlook.

A rule that cannot be applied on the server has the words "client-only" added to the end of the rule's name. Client-only-based rules are applied after all other rules. If your list of rules contains rules that can be run on the server as well as those that cannot, the server-based rules are applied first, followed by the client-only-based rules.

Click here for Step by Step tutorial on how to create Rules