I just came across this word through one of the mails from a friend. This is a good technique to hide data. What is Steganography? It is a method to hide one information inside another. Putting it in a way a layman can understand. I have a picture A. And I have some secret file B to be sent. This method helps in embedding B inside A (call the new picture as C), using an algorithm but without distorting the image to a great extent. At the receiver end the data can be extracted from C. This is just an example. Watermarking of the images is a form of Steganography. There are software tools to do this. I found a C# code for Steganography from Corinna John. The algorithm details are well written by Vlad Rabinovich.
I just liked the technique and tried a few free downloads. They worked fine!!!