A sponge filter is a very simple device that uses air pumped from outside the tank to draw water through one or more sponges. The sponge cells provide an excellent medium for the growth of bacteria that break down fish waste. Sponge filters typically do not provide chemical or mechanical filtration but work very well in quarantine/hospital tanks (because they usually don't contain charcoal which can break down medications) or fry rearing tanks (the sponge surface serves as a good location for fry to feed on micro-organisms and there is no danger of fry being sucked up into a filter). I have sponge filters on 7 of my tanks (all 20 gallons or less) and like the simplicity, low cost and ease of maintenance.
Gene Heitman - 12 tanks (11 freshwater and 1 saltwater), 206 gallons, 20+ species of fish/shrimp/snails, 52+ species of plants ... 10 years ago I just wanted 1 tank with some fish