This pane has two tabs at the top. One tab lets you choose a desktop picture, and the other lets you choose a screen saver.

Desktop Picture

File:DesktopPreferencePane.jpg

Fig. 1 - The Desktop pane of System Preferences, showing the Default Aqua Background.

The desktop picture is the backdrop your windows are displayed against. By default, it's a layered blue image that Apple refers to as "Aqua Blue". However, there are tons of other choices available.

The sidebar along the left side of the pane lists various collections of desktop pictures. When you click on a collection, the desktop pictures inside appear in the contents pane to the right. If the image doesn't fit your screen correctly, a pop-up box appears offering a few ways to display the image:

Stretch to Fill Screen - The image is warped out of shape, shrunk, or enlarged as necessary so that it perfectly fills your screen. This works well for some images, but horribly mangles others.
Fill Screen - The image is enlarged or shrunk so that your screen is completely covered. However, the shape (aspect ratio) is unaltered, even if the shape of the image doesn't match the shape of your screen. This means that part of the image will most likely not be shown.
Center - The image is shown actual size, actual shape, smack in the middle of your screen. If the image doesn't fill the screen, then the remaining space is filled with a color of your choice. A color well appears next to the pop-up that lets you choose the color.
Tile - The image is repeated over and over so that it fills up your screen.

What is lacking is a setting that might be called "Fit Longest Dimension" that would maximize the size of the image without cropping and without altering the aspect ratio. When the aspect ratio of the picture does not match the screen, the remaining space would be filled with a chosen color.

Screensaver

File:ScreensaverPreferencePane.jpg

Fig. 2 - The Screensaver pane of System Preferences, showing Apple's Album Art Screensaver.

The Screensaver pane is setup much the same way that Desktop pane is set. It will default to A moving picture of the Apple Logo and your computer's name, but you have a plethora of options, including many freely-released third-party screensavers.

The list of the left of the Preference Pane displays all the screensavers installed on your system along with options to add more. When a screen saver is selected a preview will be generated in the rectangle in the centre of the Preference Pan. You may press Test to see a full screen preview. You have the option of adjusting the delay between user inactivity and the appearance of the screensaver, and by pressing the Options button you can configure any settings that an individual screen saver may have.