In Modern Paganism and witchcraft, those who practice gray magic are often called grey or neutral) witches. While other practitioners follow white (constructive) or black (destructive) magic (sometimes called right-hand or left-hand path), gray practitioners seek to balance out the two opposing magical forces in some form of a middle ground. Gray witches practice both evil and good magic. They are neutral entities and practice polarity and balance. Gray witchcraft is the practice of worship and magic which recognizes the importance of all polarities as legitimate and necessary without deception of the masses, the self, or the use of informational resources. Grey witches practice balance and harmony, and they deny the concept that such things can occur without recognition of total and true polarity.
Grey witchcraft is probably better understood not as a form of magic, but as a mindset or philosophy. The grey witch won't be the one to scorn another witch for casting a love spell or hexing an enemy. She understands and respects the merits of dark arts and has likely invoked an infernal deity or two in the past. But the grey witch isn't one to mock or dismiss the craft of the white witch either.
Working with both left and right, dark and light, black and white. With this path, there is no right or wrong, just what you deem moral. Grey witchcraft is very personal, deciding what defines your middle line of the craft. Many witches in this aspect choose what concepts they go with, whether that's yin and yang, only performing binding spells OR to take it upon the witch themself to act with karma as a Karmic Witch, and performing hexes or curses when they deem fit. They also understand that self love and creating peace and healing is important for an individual.
The history of grey witchcraft follows the same stream as white or black witchcraft. Most sources are lost to us today, but I did manage to dig up a few resources discussing grey witches throughout the 19th century. You can read about my findings here, but I'll give a quick summary.
One of the oldest sources I found comes from Gleanings in England written by the clergyman Samuel Jackson Pratt in 1801. In it, he indicates the grey witch as playing a role in the Witches of Warboys witch trials around the year 1590.
But one source that I found most interesting comes from the Household Words weekly journal, written and edited by none other than Charles Dickens in 1857. In the journal, he dedicates a section to the Witches of England, where he describes the "three classes of witches". These are, of course, the white witch, black witch, and our dear grey witch. Charles Dickens is a famous author who has produced classic works such as Oliver Twist and A Christmas Carol. With a historical figure as substantial as Dickens recognizing the entity of the grey witch, there is little doubt that she is a very real part of the legacy of witchcraft.
For grey Witchery, Common goddesses are Hecate, Nyx, Lilith, Lady Morena, Morrígan and Mafdet. Common gods are Loki, Lucifer, and Poseidon.
Both good and bane are necessary for proper balance as is clearly defined by nature. The Gray Wizard or Witch looks to nature to seek out proper balance and harmony.
Karmic law and its methods are written into nature to ensure proper balance. Karmic law is not based upon intentions but rather on actions; karmic law by itself has no care for intentions.
Grey witchcraft is a wonderful path for that of a witch that cannot be defined by the laws and rules that of the Right or Left hand path, but choosing their own path understanding that not everything is black and white.
Studying grey witchcraft means to study both the dark and light, studying philosophy and the natural balance of all things, you may agree and disagree with different statements, each individual's grey craft is unique to themselves, no practice will be quite the same. It is important to find you space, and where you draw your lines.