In December of 2007, we announced a partnership with a Seattle-based company called Picnik. Picnik offers world-class web-based photo editing services. Thanks to a handy integration, we're able to deliver all the cool Picnik tools from within Flickr itself.
If you'd like to know more, visit the Picnik website, where you'll find a ton of details on the editing functionality and creative tools available, from resizing and cropping to applying all sorts of filters and effects. You can even take Picnik for a test drive first, if you like.
There's also an Official Picnik group on Flickr, where you can chat to other people using the Picnik service, and get help if you need it.
To get started using Picnik, just click on the "Edit Photo" button on a photo's main page.

The next step is to say you're happy to have Picnik open up within your Flickr account, by clicking the big OK button that shows up. (You only have to do this once.) Then, you're good to go, and Picnik should load up right there and then!

Note: We need to make sure it's OK to open up Picnik within Flickr because once you've edited a photo using Picnik and saved it, a new photo will be uploaded to your account. (It's a lot like other 3rd party applications built using the public Flickr API - some of these applications can actually write data to your Flickr account, or even let you delete your Flickr photos from within their service, so we need to make sure you're cool with that.)
Here is a list of your options:

Firstly, anyone with a free or pro Flickr account can access Picnik using Flickr.
If you have a Picnik premium account as well, the Super Duper version of Picnik will open up within Flickr. (Want to know more about Picnik Premium?)
Actually replacing a photo with a freshly Picnikified one is only available to Flickr pro account holders. But! If you have a free Flickr account, you can still save your edited version. (It works a little bit like the current "replace" feature on Flickr, which is only available to pro account holders too.)
When you’ve finished editing your photo in Picnik, if the picture is larger than 2800x2800 pixels, we’ll need to resize it first. (That’s roughly 9"x9" when printed at 300 dpi.) Don’t worry, Picnik will always ask you if you’re sure you want to resize.
Yes, you can, but only if you have Flickr pro account. You need to open up the edited version in Picnik, and then press “Undo” until your original version returns. Note that if you have edited an enormous image that required a resize, the original size cannot be retrieved, but the edits that you made can be reverted.
Yes, since uploading an edited version of a photo is just like a regular upload - i.e. you're still using bandwidth. None of the other free Flickr account limits are affected by the Picnik system.
Since - under the hood - the Picnik system is much like any other application built using the Flickr API, you can "de-couple" it from your Flickr account. Just head for the list of all the third party applications you're using, and "remove permission" against Picnik.