I did some looking into this one when it hit my site a few weeks back. It turns out that it's a plugin/3rd party application that some ISP's can purchase and run for their clients whereby if someone uses this search mode, it will come up with suggested websites that closely match the string entered if the URL the client types in leads to a 404 return.
Surfairy keeps it's own database of websites which it spiders regularly to provide an updated database to ISP's using this feature. Kinda interesting. Seems to not be agressive so I don't see any reason to ban this one.
An official explanation from Divago Inc. ========================================
As you already noted, Surfairy is an addon to the Internet Explorer which will replace the error messages (40x, 50x and DNS errors) with an inteligent answer. The system can also operate on ISP sites without a client. In order to provide the inteligent answer we maintain a database of active URLs. We don't scan the site and we only check for home page existance so the spider is minimally intrusive. The client is available on our site for download so you are invited to try it. If you need more information feel free to send me an email to firstname.lastname@example.org