How do I create a favicon?
A favicon is an image of 16 x 16 pixels. To use this image as a favicon you have to save it in the appropriate format and embed it in the HTML code of your website.
Favicon image format
A favicon image can be saved as a .ico, .png or .gif image. The .ico format is the best format to use, because .png and .gif favicons are not supported by all browsers (especially older Internet Explorer versions). Problem with the .ico format is that it is not widely supported. You can’t create a .ico file with Photoshop.
.ico plug-in for Photoshop
This problem is solved with the .ico plugin from Telegraphics. With this plugin you can export .ico files from Photoshop. You can download it here.
Embed your favicon in HTML
To make your favicon visible to the visitors of your website you have to embed the location of your favicon in the HTML code of your website. To do this you can use this code:
<link rel="shortcut icon" href="http://www.yourwebsite.com/path/to/your/favicon.ico" />
What is a favicon?
Photoshop .ico plugin: tested it, liked it