When a picture needs to get sized down, you obviously can't display every pixel from the maximum sized version in the downsized version. (Hence downsizing). So, an algorithm is applied to da pixelz in order to make the scaled down picture appear as close as possible to the actual sized one. Pictures like take advantage of that said algorithm is a standard, so any standard-compliant jpg/png reader (not sure if one or both) will have the same scaled down result for the same normal-sized photo. I've never actually tried to make one, so I can't say how you would go about that, but essentially the picture does the scaling down algorithm in reverse, finds the "unimportant" pixels (i.e. the ones that are hardly taken into account when scaling the picture down), places the desired image in those, then performs magic so the other pixels will look moderately the same but make the smaller image.

tl;dr: Image software knows how to scale down pic. So it can say "These pixels not used on scale down". So it can help you put image in barely-used pixels. And put other image in used ones.