How to display your web site logo on the address bar and in the favorites list

Want to make your web site standout in crowded favorites lists in browsers and address bars? How about displaying your logo next to links to your site.

First, you have to create a logo for your site; a very tiny logo to be specific. The size of the logo should be 16x16 pixels and it should be saved as a Windows icon file (logo.ico for example).