According to Wikipedia, 'S' is supposed to be a standard runlevel: "Single-User Mode". But if I'm not mistaken, the Single-User mode on Debian is Runlevel 1. One Debian article I found claims, that 'S' is a runlevel "that the system uses on it's way to another runlevel". Interesting...
Actually, I had always pretty much ignored this runlevel so far, but today I played around with Firestarter (yes, really, an end-user firewall) just because I was curious, which firewall rules it would generate. But then I noticed, that it creates a startup hook in /etc/rcS.d, and I wondered, if my firewall script should maybe have that, too?
Now I'm even more interested in knowing what it actually is on Debian/Ubuntu, because the Shorewall package (which is a strongly "Debianized" package) also creates its (only!) startup hook in rcS.d!