Hotlinking, inline linking, remote linking and many other terms are used to describe a way taking images, or other files and embedding it directly into a website. In other words, unauthorized use of someone else's bandwidth. Hotlinked files are files not stored on your own server. For example, a hotlinked image code would look something like this:
<img scr="http://www.notmysite.com/not-my-image.jpg">

If you don't have permission, remote linking to any media and / or program file is theft.
Yes, theft.

When people link directly to a media file (gif, jpg, png, mov etc.), the webmaster of the original site has to pay the fees. When someone links to a page on that same website, the webmaster still pays fees but the content is shown in the form the designer (and copyright holder) wished, and they may be able to cover costs by displaying advertising on the page.

Some things webmasters can do to hotlinkers:
1. Rename the file and give the hotlinker a broken file.
2. Replace it with a very nasty file (think of whatever you'd most dislike seeing on your page and I can guarantee the website owner with the original content can imagine something ten times worse.)
3. Replace it with a notice that hotlinking is not allowed and an advertisement for their own website.
4. Contact the hotlinker's website host and submit a copyright / terms of service abuse report. In most cases this will result in the hotlinker losing their website