More commonly known as green screen, the process by which a subject filmed on a camera can be seamlessly inserted into a scene generated by other means. It relies on filming the subject in front of a solid-color background — usually green or blue — and causing the editing system to replace that color with the background signal.
This technique is Older Than They Think. Before the existence of computer editing, the effect could be achieved using rear projection, double-exposing the film, or a Matte Shot.
The technique is usually used to composite the subject into a computer generated environment, but other live action footage, matte paintings, traditional animation, or some combination of all can be used also.
The color used is now entirely arbitrary. Blue was a popular choice in the early days of color motion pictures, because it is complementary to the reds found in human skin. Green became popular because digital editing systems can isolate green with less light in the background, and because lime green is less common than bright blue in costumingnote Magenta is sometimes used, as is black, but the latter is problematic, as it's almost impossible to shoot a person without having some black visible on their person, in eyes or shadows.