Backgrounds are primarily used in a Web browser (browser: Software that interprets HTML files, formats them into Web pages, and displays them. A Web browser, such as Windows Internet Explorer, can follow hyperlinks, transfer files, and play sound or video files that are embedded in Web pages.) to create a more interesting background for online viewing. However, you can display backgrounds in Web layout and most other views, except normal view and outline view.
Watermarks are text or pictures that appear behind document text. They often add interest or identify the document status, such as marking a document as a "Draft." Watermarks are intended for printed documents.
Use gradients (gradient: A gradual progression of colors and shades, usually from one color to another color, or from one shade to another shade of the same color.), patterns, pictures, solid colors, or textures for backgrounds. Gradients, patterns, pictures, and textures are tiled, or repeated, to fill the page. When you save a document as a Web page, the textures and gradients are saved as JPEG (JPEG: A graphics file format (.jpg extension in Microsoft Windows) supported by many Web browsers that was developed for compressing and storing photographic images. It's best used for graphics with many colors, such as scanned photos.) files and the patterns are saved as GIF (GIF: A graphics file format (.gif extension in Windows) used to display indexed-color graphics on the World Wide Web. It supports up to 256 colors and uses lossless compression, meaning that no image data is lost when the file is compressed.) files.
You can see watermarks in print layout view (Print Layout view: A view of a document or other object as it will appear when you print it. For example, items such as headers, footnotes, columns, and text boxes appear in their actual positions.) or on a printed document. If you use a picture, you can lighten it, or wash it out, so that it doesn't interfere with document text. If you use text, you can select from built-in phrases, or enter your own.