It’s rude.

You see an image on someone’s web server that you’d like to use, and rather than make a copy of the image and host it on your own site (which may in and of itself be not-so-nice), you simply hotlink it – that is, make your <img> tag point directly to the site you found the image on, rather than hosting it yourself.

I found someone doing this with one of my images earlier this evening.

Suffice it to say, there’s an interesting image now being served up to the viewers of the other site: