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Cut something or a piece of something off or from (something larger) and fames tools of Photoshop. Slicing is the technique in photoshop that allows you to divide the images in small parts to use it later on a website.
This is the only purpose of the slice tool: you can design a web page in photoshop and chop it in small parts, dividing it in buttons, images, menus and background, and then export it as html and images from Image Ready (a web optimization software that is also included in Photoshop).
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