Contacts
The contact list is a list of pubkeys that a user considers legitimate (neither spam nor malicious). They are not necessarily friends, and they are not determiniate of a user's feed. Clients should automatically add keys to this list when a user behaves in a way that indicates the key is not spam or malicious, such as when a user replies to one of their posts.
The details of this are TBD.
Web of Trust
The purpose of the list is to create a web of trust among shared contacts, that can be used as a way to detect and filter spam and malicious actors.
Nicknames
Additionally, users can nickname other users if the other user's 'name' collides amongst their contacts, or if they just find it easier to remember them by a different nickname.