Watermarking when referring to digital images is the process of ‘stamping’ your image with text or an image to show either author authenticity and/or to protect others from stealing your images. There are many ways to watermark an image, but one of the easiest is the free version of WaterMarquee.
How it works is like this:
Go to WaterMarquee and add an image via the big "Add Images" button.
After that, click the big "Set Watermark" button. You’ll then be presented with a dialog asking you what you want your watermark to be. It can be either typed out text or another image (such as your own logo).
I took a quick screen shot for testing purposes, added the image, then set my watermark as center-placed text of "This is a test" in the font of Impact, size 50 and a color of near-white since the center of the image was dark:

The site added the appropriate text I wanted. I’ve zoomed and cropped in so you can see it better:

After applying your watermark, a "Save Images" button will appear to the right of "Set Watermark":

When you click this button, you’ll have the option of downloading as a ZIP or just a right-click-and-save on the newly watermarked image:

Personally, I think it’s easier just to do the right-click-and-save thing instead of dealing with the ZIP. And yes, the downloaded image will be the original full-sized one with the watermark you added.
Give it a try: http://www.watermarquee.com/basic.html

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