The amount of contacts in the suppressed list DO NOT count toward your total contacts. They are not counted in your All list total, at all, at any time. So you don't have to worry about the suppressed contacts taking up any space.
Further, when contacts are added to the suppressed list, Email Marketing preserves any mailing stats and other details associated with those contacts, even though you’re not sending to them anymore.
When an email is bounced, or the subscriber opts out, or they mark the email as spam, the email address is automatically placed in the suppressed list. Bounced emails are retried (just in case), and the email address is moved back to the active subscribers list, if the email is successfully delivered.
When a subscriber signs up through a double opt-in form, they are unconfirmed and placed in your suppressed list. The contact will stay there until they click the confirmation link sent to their email. Then they are moved automatically to your active subscribers list.
You can also put contacts into the suppressed list, yourself.
It's very important that you don't send again to anyone who has unsubscribed, marked your email as spam, or bounced. And you shouldn't send to anyone who hasn't confirmed their address, if you're using a double opt-in signup form. Your good delivery depends on you sending to only a safe, healthy list. Sending to folks who have been suppressed runs you the risk of bad delivery quality, abuse complaints, and potentially having your account suspended.
Please leave this list intact and do not delete contacts from it, at all. If manually unsuppressing specific contacts, please be sure that they have asked to be re-added to your subscriber list.