Best way to explain is the info from Danasoft's site^ What is that in your sig?
"The cool thing about this graphic is that when people see it, they think their private information (like their city or IP address) is being publicly shown on your Myspace background, layout, blog, or forum, and they think that other people can see their private info! Their first thought is, "hey, how did my IP address get on this website?!", or "why is this website telling people where I live?!" In reality, they are the only one that can see their private info, because the graphic is created in real-time for each person who sees it. When you see the graphic, you will see your IP. When others see the graphic, they will see their IP."
"This sign makes people realize how vulnerable they are when surfing the web. If you're visiting this site wondering how we know your IP address, you should know that your IP address is automatically shown to every website you visit, including this one."