Rabbits excrete two types of droppings, ordinary fecal waste matter, which are dried out pellets (fecal pellets) and cecotropes, which are not fecal matter and form moist grape like bunches. Cecotropes are predigested hay/food pellets for the rabbit to eat and further digest.
A rabbits digestive system has a two step process.
A rabbit requires a substantial proportion of hay and/or grass in their diet. This type of roughage is difficult to digest in any animal gut, and the rabbit's gut is highly specialized to process this in the cecum. Here the fibre is partially digested and the rabbit excretes this partially processed fibre as a specialized pellet called a cecotrope.
The rabbit then eats the cecotrope and the nutrients that were locked within (almost indigestible) hay or grass are absorbed by the rabbit's gut. This predigested matter is easier to process the second time around. Any waste produced by digesting the cecotrope is expelled as normal, inedible fecal matter, as is any waste products foods in the rabbit's diet that is easier to digest).
Rabbit's will usually feed on their cecotropes overnight, which is why some owners may not see them doing this.
Cecotropes are a good source of nutrition: vitamins, fatty acids and protein for rabbits (1). In fact, rabbits cannot survive without them.
The Scoop on Poop
The cecum contains a wild brew of bacteria and fungi that are normal and beneficial for the rabbit. In fact, the rabbit cannot live without them, since the cecal flora produces essential nutrients (e.g., fatty acids and vitamins) that the rabbit cannot produce on her own.
There is more detail about this in this post here
Why is adding hay to a rabbit's diet important?
San Diego House Rabbit Society
San Diego HRS sandiegorabbits.org
Rabbit Nutrition: What you Need to Know
University of California
Agriculture and Natural Resources PDF
The Small Mammals Health Series
Susan Brown, DVM
Ferrets, Rabbits and Rodents: Clinical Medicine and Surgery
Book By Katherine Quesenberry, James W. Carpenter ISBN-9781416066217 (1) This book give great detail about the protein and other nutritional benefits of cecotropes.