Marquetry is the centuries-old art of creating images--pictures or designs--in wood by carefully cutting pieces of wood veneer and fitting them together into a picture. The images can be incorporated into furniture, used to decorate accessories such as jewelry boxes, or framed and hung on the wall.
The American Marquetry Society has written a good summary of the history of marquetry and the various modern methods of doing marquetry, which you can find on their website. For a more thorough discussion of the history of marquetry and extensive photos of marquetry pieces, see A Marquetry Odyssey, by Silas Kopf. For a good basic reference on a wide range of marquetry techniques, see The Marquetry Manual, by William Lincoln.