Sam extracting his blood after undergoing a confession.
Purified blood is the blood from a human who has undergone repentance and confession. It is used as a main catalyst in curing demons.
Background
Max Thompson, a member of the Men of Letters, was a priest who experimented on demons. He believed that demons could be made to repent and thus could be cured and reverted to humanity. He formulated the procedure on curing demons, which required purified blood. The person attempting to cure the demon must confess and repent for its sins. The act purified the blood of the person. The blood was then injected into the demon during interrogation. Several doses of the purified blood was required before the demon began to feel the effect. After being infused with a significant amount of purified blood, the demon began to feel repentant.
Max Thompson performed this ritual, along with a modified incantation of the exorcism chant until he successfully managed to cure a demon. This was documented in video clips kept by Father Simon, who handed the files to the Winchesters. The hunters later kept the clips in the archives of the bunker of the men of letters.
Season 8
Sam Winchester attempted to cure Crowley as the third trial to close the gates of hell. Like Father Thompson, Sam infused several shots of his purified blood into the King of Hell, which caused Crowley to repent for his sins, asking the hunter where to start to ask for forgiveness.
Note
Confessing appeared to purify even the blood of a human who has been infused with demon blood, as evidenced with Sam Winchester.