See IM Examples
Image Transforms, Stegano
http://www.imagemagick.org/Usage/transform/#stegano
Essentially it replaces the lowest color bits (which is typically not visible to the eye) with other information. Over a large image that can be a lot of information. Combined with encryption, randomized distribution, image coordinate offsets, and data redundancy, you can store quite a bit of additional information in a typical image.
It however does not work for JPEG or other 'lossy' compression methods, and any 'modification' of the image (resize, cropping, watermarking etc) will generally destroy the hidden data. It is not a good 'watermarking' or copyright technique.
The point of stegano, is to hide extra information without making the presence of such information obvious, as it is with typical encryption methods.
I can say it is being used to securely transmit messages across the internet in a way that is rarely interceptable (or even delectable) by a third party, (governments and security agency's). I am not however talking about IM's simple implementation, but much more advanced versions.
