From Lunarpages Web Hosting Wiki
Favicons are those little graphics you see by your URL in the address bar of many of the world’s most used browsers out there. They are not just there for decoration though, they serve a purpose by giving you a tiny reminder of the web site you are on. In Internet Explorer, Mozilla Firefox, Opera, and Konqueror, favicons are displayed in all available tabs, the bookmark toolbar/menu and the location bar.
So let’s get started creating a favicon.
Creating a Favicon by Hand
Favicon creation is not that hard, as long as you have a good graphic editing program. What you need to remember is keep it 16×16 pixels and name it favicon.ico. Also it will need to be in the root folder for the domain in question - so for example on our Basic or Business hosting plans for your primary domain name that would be your public_html folder. If it is located somewhere else you can specify a location with these strings in between your <head> and </head> code on your web page:
<link rel="shortcut icon" href="http://example.com/favicon.ico" type="image/x-icon" />
<link rel="icon" href="http://example.com/favicon.ico" type="image/x-icon" />
Using Online Tools to Create Favicons
There are many Online resources that will help you in the creation of Favicons too. Here are a few to get you started:
So there you have it - and arts and crafts project for the weekend. Create yourself a favicon, and please feel free to let us know where you posted it too.