KML and Photos

As previously mentioned, Google Earth version 4.2 allows you to add and navigate high definition photos. As with other content in Google Earth, these photos are specified in KML. In this case, the important KML tag is PhotoOverlay. According to the KML documentation:

The PhotoOverlay element allows you to geographically locate a photograph on the Earth and to specify the placement and orientation of the Camera that views this PhotoOverlay. The PhotoOverlay can be a simple 2D rectangle, a partial or full cylinder, or a sphere (for spherical panoramas). The ImagePyramid child element of PhotoOverlay provides for efficient handling of arbitrarily large photographs in Google Earth.

Read more about using KML and photos.