Filtering is passing the wine through a filter small enough to remove undesirable elements that prevent either clarity or biological stability. Various filtering technologies allow great flexibility to winemakers to deal with specific production conditions and to make wines of varying styles.
Depth or sheet filtration uses a relatively thick layer of fine material (diatomaceous earth, cellulose powder, perlite) to trap and remove small particles.
Surface or membrane filtration passes wine through a thin film of plastic polymer with uniformly-sized holes that are smaller than the particles.
Sterile filtration uses micropore filters, which are fine enough to remove yeast cells, to prevent further fermentation. This is especially significant when residual sugar is allowed to remain in the wine at low levels. Prior to the advent of modern micropore filtration, slightly sweet wines were endangered by the possibility of revived fermentation in the bottle.
As with fining, filtering also removes some elements that contribute to flavors and aromas, so winemakers need to be judicious and conservative with this technique to avoid "collateral damage" that leaves the wine clean but lifeless.
When the term "unfiltered" appears on a wine label, it serves as notice that the wine inside may be less than perfectly clear and may contain more than a usual amount of sediment. That said, however, wineries are under no legal or moral obligation to reveal to what degree or whether or not a wine has been filtered.