Slicing is the technique in photoshop that allows you to divide the images in small parts to use it later on a website.
This is the only purpose of the slice tool: you can design a web page in photoshop and chop it in small parts, dividing it in buttons, images, menus and background, and then export it as html and images from ImageReady (a web optimization software that is also included in Photoshop).
Slicing is a technique to cut a large image into small pieces. This used in web graphics. A large image will require higher bandwidth to download, while small pieces of the image will require lest bandwidth.
We design the web theme in Adobe Photoshop and then by using the slicing we save each part of the theme as independent image. We use the Adobe Photoshop's web page publishing option to generate the web page according to our slicing.
To create the slice we use slice tool, available at main tool bar. We have two slice tools (a) Slice Tool (b) Slice Select Tool. Using Slice Tool we create slices. Just draw and select the desired area, the slice is created. Then using the Slice Select Tool we can modify the slice. We can resize, move or even delete a slice by Slice Select Tool.
When we create a slice it shows a numbered boxes. Each numbered box will be an image. We can create links or create a text slice as well. To do this, select the Slice Select Tool and double click on the slick box. A window will open; here we can define these properties for the slice. When we will save this file (File -> Save for Web) then an HTML page will be created and all the sliced will be save as separate files.