Embedding — also called hotlinking or inline linking — is a way for a website to display an image (or other content) without hosting the image on its own servers. Instead, the website contains HTML instructions that cause the user’s web browser to obtain the image from the original source location. Embedding is commonly used to display content from Twitter or Facebook on another website. The website includes an HTML link to a tweet or Facebook post, which causes a window to be displayed on the website, showing the content or an excerpt of it. Users who click on the excerpt are taken to the source website.
If the use of embedded content even constitutes copying — and thus a prima facie case of copyright infringement could be made — then there could be a strong argument for fair use. Following the Ninth Circuit’s reasoning regarding thumbnail images in Kelly v. Arriba Soft, it could be argued that hotlinks guide users toward the source website rather than away from it, and thus there is little harm to the value of or market for the original images. This argument would be strengthened if the images that appeared on the allegedly infringing website were smaller or lower-resolution than the originals.
However, it is important to note that the most important court decision to address inline linking did not reach a fair use analysis on that issue. Instead, the U.S. Court of Appeals for the Ninth Circuit, in the case of Perfect 10 v. Amazon, found that inline linking simply did not constitute copying at all. Where Google’s Image Search contained inline links to images hosted on another website, the court found that “[b]ecause Google’s computers do not store the photographic images, Google does not have a copy of the images for purposes of the Copyright Act. … Instead of communicating a copy of the image, Google provides HTML instructions that direct a user’s browser to a website publisher’s computer that stores the full-size photographic image. Providing these HTML instructions is not equivalent to showing a copy.” 
There is no guarantee that another court would follow the Ninth Circuit’s reasoning. Embedding or hotlinking is not a guarantee that a certain use is not copyright infringement, but it is an important factor.
Separate from the issue of copyright, the use of hotlinks without permission is sometimes protested by the source website simply because it uses the site’s bandwidth, which can cost the site money while preventing it from earning revenue from advertising or other means. Cartoonist Matthew Inman protested the Huffington Post’s hotlinking of his images by changing the image they linked to, causing his message of dissent to appear on their website instead of his cartoon.