I didn’t know this until MattCutts shared on Google+, it’s really cool- Google lets you drag and drop any picture from your Computer onto it’s Image search to show you similar images with relevant search results. Search by Image is a feature which allows to search (not only words) in Google Image search with a picture and displays similar images for that picture uploaded from your computer or entered through an URL
Use an Image to Search on Google to find related Images
All you need to do visit images.google.com, click on Camera icon in the search box, then paste an image URL that hosted on web or upload one from your Computer, Google then displays related images with relevant results across the web, you can also drag and drop image from web or your desktop.
You can see the similar images shown by Google (check the screenshot above) under “Visually similar images” link for “koala” image uploaded by me from Sample Pictures folder in my Computer .
How search by Image works (video)
“When you search by image, your results will look different than your normal Images or Web results page. The biggest difference is that your results can include non-image results like webpages that seem relevant to the image that you searched for. The elements of your results page will change depending on your search and on the information that’s most relevant to that search.” Search by Image page reads.
Source: MattCutts post on Google+