The art of placing pixels on a computer screen, in order to create an image of some kind. The term (and in some sense the art) is connected with the demo scene, in that pixeled art is often incorporated in demos. The scene is also probably where most pixeling is (or at least used to be) done.

About the only thing that can be said about all pixeling is that it's done for fun. If it's not fun, it's not art and then it's not pixeling, but mere computer graphics. In my humble opinion, that is.

There are different ways of making computer images, since there are different programs around. Newer graphics software usually work in 24 bits, which means virtually unlimited palettes where you never have to care about whether you have enough colours left. These programs are often equipped with very sophisticated drawing tools and image processing functions.

However, in the old days, computers were unable to display 24 bit colour simultaneously. The size of the palette was very limited, as were the number of possible colours. These were the days of programs like Deluxe Paint, when you had to carefully plan your work, since you had only, say, 32 available colours.

Now, there may be some confusion as to what kind of drawing is qualified to be labelled as pixeling. I think that the term somehow loses its meaning when applied to programs like Photoshop, since you're rarely concerned with individual pixels when you're drawing in such a program. It's kind of abstracted on a higher level. As opposed to an old school image, where the pixel is the basic building block and you just can't avoid tweaking the image on a pixel level if you want good results. It takes time, but it's almost a kind of meditation.