ImageAnnotator recognizes this template, and switches on note display for any images so encapsulated, even if the image is displayed on an arbitrary page. If the page contains exactly one ImageWithNotes template and is visited directly (as opposed to being viewed on yet another page through transclusion), ImageAnnotator even switches on adding and editing notes. If there are multiple occurrences of the template on one page (for instance, as the result of transcluding several pages), only note viewing is allowed.
This can be used to create "local" notes stored on some page other than the file description page and visible only when that other page is viewed, without interfering with any notes the image might have on its file description page. At featured picture candidates, this feature is used to enable the creation of notes that are pertinent only to the nomination discussion. The notes added there get stored on the nomination page, and thus they are visible and editable only on these nomination pages, but they don't appear at all on the file description pages.
Note that this template must be substed! It won't work otherwise!
A sample usage can be found in Template:FPCnom/Basic. The img parameter must be a simple image link (possibly with a size), but it must not be a thumbnail. [[File:Example.jpg|thumb|300px]] won't work: ImageAnnotator will not work with such thumbnails, but [[File:Example.jpg|300px]] will work.