What is a Security Image?

Security images help to combat automated robots that crawl around the web looking for forms like this one. If they can manipulate that form for its own purposes, it can turn it into a spam relay. By adding a security image, the robots are unable to identify the information contained in the image. If the robot can't enter the correct code, the script will not send the e-mail, sparing you and everyone else a few spam messages.

Why is the image scrambled?

The scrambled background makes it very difficult for robots to try and extract the values from the image. With out the background noise, a robot could use common OCR (Optical Character Recognition) software to extract the value.

Couldn't they enter in the values manually?

Yes, if they wanted to do so every time. Each time you visit the form, a brand new image is generated. This means you can't use the old value next time.