SHSH Blobs are required for iOS 4.2.1.
SHSH Blobs are basically a cached version of the server response Apple gives when you ask to downgrade. When a new iOS update is released you cannot downgrade without them. However if you saved them, they mimic Apple's server telling your computer "Yes you can downgrade". This cannot downgrade your baseband if you have iPhone though.
You can save SHSH Blobs in a variety of ways. One is using TinyUmbrella to save them. It's available for Windows, Mac & Linux, just google for the homepage.
You can also use a Cydia tweak called iSHSHit to save your SHSH Blobs on your iDevice and then email them to yourself.
Without SHSH Blobs, you cannot downgrade.