Gracenotes as far as I understand it, is a kind of local(saved on sync3 apim) database for music information including album art, title , album, genre,etc., say when you play a song on your phone or a usb, if the track name matches, the gracenotes will fill up the missing information and show the album art and other stuff. Since the Apim has a limited data space, obviously it cannot hold every information on every artist and album. So, there's a redundancy implemented that if the playing device has data connection, it can transmit the album art via bluetooth or wifi to the Sync3, but in my experience, it has never worked properly.
