I think it's worth noting that this example 'can' be misinterpreted if you aren't paying attention. It looks like all traffic is dropped and nothing will ever reach the allow. Ie: A top down ruleset.
But: the '-P' means 'default policy' for the specified chain -- in this case 'INPUT'. So the default policy once a packet has traversed the entire rule set in the chain, is DROP. You could read it in plain english like this:
Code:
iptables -P INPUT -j DROP # If a packet traverses the ENTIRE ruleset in the chain INPUT then DROP