It is the little thing you see on your Location bar (History/Address bar) when you visit a web site, on the left of http://. For example, if you view a site through Internet Explorer, you see an e superimposed over a blank white paper sheet. The icon also shows up when you press CTRL+D to save the link in your Favourites folder. I think the icon is showed anywhere you store the link, whether on the Desktop or some other place.
But some web masters prefer to have their own icon. This helps to make the web site memorable, and more prominent in the list of hundreds of Favourite links, or repulsive if you make an ugly icon.
First you need to upload the icon on to your server if you really want it be visible to your visitors.
Once uploaded (remember to call it favicon.ico) simply add the following code between the head tags of your pages
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