Some digital cameras store information in the images they create in the form of EXIF headers. This metadata may also include a thumbnail. This is great, but not all image editing programs use this. Some, in fact, seem to keep the original information (including the thumbnail) even after the photo has been edited.
This is why I put together the JPEG Thumbnail Checker. It is based around a small utility called jhead and displays the embedded thumbnail (if one exists) from an image the user uploads via the web form.
Excellent. I did some work with jhead myself to find hidden thumbnails in images. I've posted the results here: http://hutta.com/thumbs/