Pictorial cancellations, in philately, are cancellations in which part of the cancellation or postmark or a combination of the two contains some sort of picture or image; the term is sometimes used, loosely and perhaps technically incorrectly, for cancellations containing some sort of commemorative phrase in addition to the regular format of the cancellation.
In the United States, what are officiallly described as pictorial cancellations (though there are frequently other pictorial cancellations if not officially so described -- they are among what are called special cancellations and are special die-hubs added to machine cancels, which usually contain merely a slogan but sometimes contain a picture) are almost invariably applied at special "stations" (post offices existing only for a limited time, usually one day, at special events).
Pictorial cancellations may, though more commonly in other countries than in the United States, form the day-to-day cancellation of a station.
There can also be pictorial cancellations applied by private local posts or to accompany artistamps on cover.
Reference: Pictorial Cancellations Handbook, United States Postal Service (http://www.usps.com/cpim/ftp/hand/po230.pdf)
External link
Nova Scotia community gets UFO postmark (http://www.canoe.ca/CNEWSWeirdNews0103/27_ufo-par.html)
On mail, a cancellation (or cancel for short) is a postal marking applied to a postage stamp or postal stationery indicating that the item has been used.
Pen cancels may still occasionally be seen (sometimes done with marker), typically when a postal clerk notices that a stamp has not been touched by the automated machinery (though there have sometimes been complaints by stamp collectors of redundant pen cancels by overzealous postal employees).
In addition to everyday cancellations there are pictorialcancellations, which as the name suggests contain pictures or images associated with the commemoration of an event or anniversary.