[mjn]

Basically the sovereign-country version of declaring bankruptcy, yes, except that it's messier because there is no bankruptcy court with jurisdiction to oversee it. You declare that you can't pay some or all of the outstanding debts, the creditors take a loss, your credit is ruined for the near-term future, some of it possibly ends up in various courts.

Alternately, you use the threat of that default to renegotiate the debt on more favorable terms. This also happens with personal bankruptcy, though the situations aren't quite analogous (some creditors will negotiate a more favorable repayment plan with debtors who seem like they might otherwise declare bankruptcy).

Unfortunately for Greece, afaict they have less leverage now than they did in 2010. At the time, much of their debt was held by German and French banks, so there was a mutually assured destruction angle. France/Germany would probably not sit by and let their large banks go down with the ship in the case of a Greek bankruptcy. So they would be forced to bail out the situation one way or the other, either bailing out Greece and thereby indirectly bailing out their banks by giving Greece money to pay them, or letting Greece default and then bailing out their banks directly. Now most of the debt has been moved to institutional holdings (the European Central Bank, IMF, etc.) as part of the bailout, which is less directly threatening. Probably Greece should've bargained harder at the time, but the previous government was a bit spineless.