It's often useful to place some text (such as 'DRAFT') in the background of every page of a document. For LaTeX users, this can be achieved with the draftcopy package. This can deal with many types of DVI processors (in the same way that the graphics package does) and knows translations for the word 'DRAFT' into a wide range of languages (though you can choose your own word, too).
More elaborate watermarks may be achieved using the eso-pic
package, which in turn uses the package everyshi, part of
Martin Schröder's ms bundle. Eso-pic attaches a
picture environment to every page as it is shipped out;
you can put things into that environment. The package provides
commands for placing things at certain useful points (like "text
upper left" or "text centre") in the picture, but you're at liberty
to do what you like.
The wallpaper package builds, as above, on eso-pic. Apart from the single-image backdrops described above ("wallpapers", of course, to this package), the package provides facilities for tiling images. All its commands come in pairs: on for "general" use, and one applying to the current page only.
This question on the Web: http://www.tex.ac.uk/cgi-bin/texfaq2html?label=watermark