Favicons are the little icons that show up in the address bar of the web browser for some websites. For example, the favicon for blogger.com is the little orange square with the B in it.
Favicons are totally optional, but a well-designed favicon can add a slightly more sophisticated feel to your site, even though the user may not ever realize it is there.
So of course, you will want to create a favicon for your own sites. Favicons are 16 pixels wide and 16 pixels tall. They are saved in a special .ico image format that is not natively supported by graphic design programs like Photoshop. This article has a good explanation of how to download a Photoshop plugin that lets you save favicons in .ico format using Photoshop.
If you don’t have Photoshop, you can still create favicons by using a variety of website services that convert standard .jpg, .gif, or .png image files into .ico format. For example, here is one such site.
To use your favicon once you have created it, make sure the file is named favicon.ico, and put it in the root folder of your website. Then add the following code into the <head> of your XHTML code:
<head> ... <link rel="shortcut icon" href="./favicon.ico" /> ... </head>