Steganography is the art of interlacing information into digital images. It's basically like hiding stuff into cake that you send inside prisons. To a normal person, the resulting image after steganography is no more than just an image, but given a special program and a little knowhow, you can actually get any type of file extracted from the image.
Example:
1. Click on the image to my left.
2. Save the full size of this image.
3. Send it to your C:/
4. Rename it to code.rar (using command prompt)
5. Open using WinRAR
Practical applications? Well I can't really think of anything useful for it. Maybe if you feel that you must hide your pornstash inside your harddisk (if you're crazy enough) but don't want to be found out using the search tool, Google desktop or manual searching, this technique is for you.
Either that or industrial espionage, but I'd rather not discuss the implications of the latter.
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