The word azulejo comes from the Arabic for small, polished stone. This gives away their origins and Portugal needs to thank its Moorish heritage for this fantastic tradition of wall coverings.
The Arab-inspried ones are made up of multi-coloured geometrical shapes, but the Portuguese took this Islamic tradition that did not allow representation of living things and made it their own. Since the Moors left Portugal tiles have been painted with flowers, animals, buildings, battle scenes (as in my example above), saints and every other conceivable thing, quite frankly. A trip through any Portuguese city, town or village will provide you with a glimpse of any number of fantastic painted tiles.
In a more modern twist they are now a favourite way of decorating otherwise gloomy underpasses, tunnels and motorway pillars. Instead of staring at grey concrete or uninspiring graffiti tags we get to look at murals.
In the village where I live even the bus stop has them.
Check out these fabulous examples on Flickr.