Just been going through QoS in the foundation guide, it has a small bit on the Leaky bucket algorithm, but I think the wikipedia article explains in much clearer.
I had always though of it as the packets where the water running in to the bucket and there was a small hole in the bottom from which it drained out. As long as the average in was less than the drainage hole, and bursting did not over flow the bucket the water flows out with out spilling.
However I see now that in the case of CISCO switches the leaky bucket is a metering method. The packet it self does not flow in to the bucket. Rather how fast the packets flow in to the switch determines how fast the tap above the bucket it flowing. While the bucket it not full the packets can pass through the switch. But if the bucket should over flow the packets are dropped until enough water has run out of the bucket that they can continue.
Like I said the article on wikipedia explains it all very nicely, so if like me it is taking a bit to get your head around have a look.