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A paper watermark is a symbol or other marker woven into the fabric of the paper while it was being made. You usually see it by holding the paper up to a light source; its job is to positively identify the manufacturer, so as to (for example) discourage counterfeiters.
A digital watermark is a rather newer invention for the computer age. It identifies an online picture or digital photograph as either belonging to a particular artist, or as being the property of a particular website. In that sense, it functions more as a kind of signature for the artist, rather than for the canvas.
Another difference is that for a digital watermark to be effective (especially in terms of discouraging art theft) it has to be quite a bit more obvious. This usually takes the form of a logo or copyright notice defacing part of the picture, oftentimes in a central spot where its deletion would be obvious. This has caused a bit of controversy, especially between those who would like to honestly enjoy an unobstructed view of a given piece of art, and the artists who are worried about losing their hard work to a few anonymous clicks from a greedy thief.
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What is the difference between paper business cards and digital business cards?
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