A CAPTCHA is a challenge-response test used to discriminate between humans and computers. It is widely used for registration pages, and wherever a system needs to ensure it is dealing with a user and not a bot. Which is just swell.
If it was not for the fact that some CAPTCHA's are so hard to read that they actually defeat humans too. Look at these examples from Microsoft:
I cannot make out half of those letters whether they are CAPS or lowercase. I am not the only one. My favourite (at least it is easy compared to the others):