Shadow knitting, or illusion knitting, is a knitting technique for making knitted pieces that appear to be only striped when viewed straight on but contain a hidden image only viewable from an angle. The effect is created by alternating rows of two coloured yarns so that the raised stitches from one row hide the flat stitches of another row when seen from certain aspects. The "Girl With a Pearl Earring" piece above is an example of illusion knitting.
There's no way to convey the total impact of such a piece in a photograph or in a written description, so please see the video above for a better demonstration of how the image appears and disappears depending on one's vantage point. This piece is from Pat Ashforth and Steve Plummer of Woolly Thoughts. You can view a gallery of their extraordinary illusion designs here. All of the Woolly Thoughts patterns are for sale on their website or via their Ravelry page.
If you're interested in trying your hand at illusion knitting, you can begin by checking out Wikihow's illusion knitting tutorial, or browsing the hundreds of illusion knitting projects on Ravelry, many of the patterns for which are available for free. The best of the patterns are from the Woolly Thoughts designers and are quite large and elaborate, but there are a number of smaller, simpler projects, such as scarves and dishcloths. If you have enough scarves and hate knitted dishcloths like I do, I recommend the very striking tulip cushion pattern shown above, which is available gratis from All Free Knitting. You might also join one of the several Ravelry illusion knitting groups.