Seam carving is a content-aware image resizing technique created in 2007 that allows images to be reduced in size by one pixel at a time while preserving important features. It works by calculating the lowest "energy" path or seam through the image and removing it, where energy is defined by a dual-gradient function measuring color and texture differences. The algorithm uses Dijkstra's shortest path method to find seams for resizing and can also be used to remove objects or enlarge images, making it a useful tool available in applications like Photoshop and GIMP.