It is called a captcha. It is a security method designed to verify that a human is at the keyboard and not an automated program. The text is easy for a human to decipher but difficult for an automated system. A couple of sites with more information are http://en.wikipedia.org/wiki/Captcha
and http://www.captcha.net/
Recently there was an attempt for spammers to get people to help them out unwittingly by sending email of women in various states of undress along with a captcha. you entered the text in the captcha and then you got another picture with more clothes taken off. Full story here
