A snapshot is part of the history palette.  It is used to record the state of the document at a point in time.  You'll want to make snapshots before you make major changes which you might not be sure about keeping so that way you can go back to the snapshot of the .psd file at the point you "recorded" it.

To create a snapshot in Photoshop, you simply click on the camera icon in the history palette at the point in time where you want to "freeze" all of the document's information.  Now you are free to go ahead and do whatever you want to the rest of the image (on the original image or another snapshot) and move freely about the history palette.  If you don't like a technique you've tried, just go back to the snapshot to restore the state of the document before you went haiku.

You can name your snapshots and use them to compare different states of the document.  The snapshot (as many as you create) will be stored in the history palette until you close the document.  When you close the document snapshots will be lost as they are just for your current work session.

Snapshot's can be a useful tool but be careful to save the document how you want it and if you have different states you want to "save" you can just "save as" for each different state of the document and output it as another file name; this will ensure you're good to go (or you can use layer comps in Photoshop CS which is kind of like snapshot).  Snapshot's can prevent amateur mistakes when using the history palette (which will take a while to fully understand as a beginner).  Get complete Basic Photoshop training here and save $1000's of dollars.

- Article by Orion Williams copyright 2004