Pareidolia is the scientific term used to describe the phenomenon of looking at an object or image and assuming it to be something that it is not, i.e. the process of seeing an illusion and being fooled by it.
More often than not, pareidolia is associated with the paranormal, with many spotting of faces of either dead or supernatural people are the most common and least unexpected of things - clouds, sand, photos taken at a remote location, etc.
Many of the images of ghost faces that exist on the internet are examples of pareidolia.
Many of these are presumed as fake; with some hoax enthusiast putting a background and a face or a body together and making the viewer believe that the body belongs to that background.
One of the most popular examples of this phenomenon is the incident known as The Face of Mars, which showed a face like figure on the surface of the mars as observed by NASA's spacecraft, Viking - 1. This particular image, when released by NASA, made people across the world think that there was something unnatural on Mars.
But later explorations with advanced technology showed that this "face" was nothing but a small hill on the surface of the planet, which incorrectly appeared as a face. This is one of the classic cases of pareidolia.
While similar cases of pareidolia exist (faces of famous people appearing on food like baked cookies, sandwiches or even cooked turkey for that matter, perception of an image on natural produce like fruits and vegetables, etc), a significant portion of cases are related to the paranormal, and generally create the most buzz compared to regular cases.
People are always interested in the supernatural, even though they might pretend not to be, and many hoaxers have taken advantage of this part of human nature.
For example, if you search for "real ghosts' pictures" or something similar on Google images, you will see an image of a metal railing against a clear sky in the top results, with a zoomed in version of the image alongside the original.
The zoomed in image contains a clear view of what you thought was a small dot in the regular image - it actually is the face of a girl with flowing hair in between the railings.
This is another classic case of pareidolia. This is often the result of the human nature of trying to look for a familiar thing in an unfamiliar surroundings.
For instance, what is the first thing that you look for in a crowd of people? For someone you know, right? Similarly, when presented with a weird or unnatural or lonely scene, the human brain tends to search for something recognizable, perhaps something human. Almost all cases of pareidolia are a product of this nature.
However, not all of these occurences can be explained and are believed to be Paranormal. There have been unexplained photos of full and partial apparitions, Ectoplasm or unexplained appearances of people in photos when they weren't there when the photo was taken.
Many cases though, especially with faces, it's just our brain creating what we want to see.
Pareidolia is not just limited to human faces. Even UFO sightings are prone to pareidolia. Many fakers put in a random image of an UFO with a background that consists of a few trees and an empty sky (which is very easy to fake), and begin to circulate it.
This was more prevalent in the olden days than it is now. UFOs are considered paranormal too, and some images go as far as even showing the alien figure that is driving the UFO.
Almost all pareidolia images are black and white, as it is quite hard to distinguish the additions in a black and white image compared to a colored one.
Also, in the olden days, people could not exactly distinguish between images, as the knowledge of computer editing was largely limited to a very small group of people.
Today, however, many know how to use Photoshop, or at least identify images that have been altered by it. So the number of new appearances of pareidolia images has reduced considerably, and majority of the ones in existence are old ones.
One of the more recent pareidolia cases is an image from the Twin Towers crash in 2001, in which people claimed to be able to actually see the devil's face as we know him, a figure complete with horns.
This turned out to be an illusion, as expected, but it had become viral and more and more people began to associate the image with the devil.
A classic case of paranormal pareidolia, and an example of how simple patterns in images (mostly altered, rarely unaltered) can take the form of paranormal things in the human brain, and make us believe that they are something which they aren't.