A script (PHP, Java, Perl) generates a random image, (or sometimes ask the user to answer a question using random numbers such as what is 5+4), with characters and designs to prevent OCR, (optical character recognition software), which may be used to try to automatically fill these form in via a program, this could be used to Spam or as a means of trying to de-fraud the system).
Captchas are used to prevent automated spamming of website submission, posting of blogs and in the use of other online forms.
A Captchas Example. May look sometime like this 
click for audio version and ask the user to enter the characters in to the on-line form as a check that it is a real person using that form.
A Captchas is designed to help prevent software, spammers and hackers from abusing the form.
CAPTCHA: Telling Humans and Computers Apart Automatically.
Examples of Captchas Craziest Captchas on the Web.
Advice: May put-off users but could be be worthwhile if your site is likely to suffer from problems with automatic form filling software.
Any captchas may also put genuine users off completing the on-line form
Poorly displayed or hard to understand captchas may prevent or put genuine users off completing the on-line form.
If an image is used provide an audio version and allow the user the ability to obtain a new captchas image, (without having to refill all the form), which may be easier for them to use.
Remember to allow for disabled users who may find that such Captchas are difficult to use. This could lead to legal action against you for discrimination.
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