This topic is for everybody but may be more useful for beginners to intermediate but even advanced photographers may not be fully aware where the diffraction limit of their camera is. Basically when you hit or exceed the diffraction point, that is the point your aperture is small enough that your images start becoming soft. Very good article on it here.

If nothing else, you should run the calculator for your sensor size to see at what aperture is the smallest you should ever use before the image starts deteriorating . Cambridge In Color

Diffraction is an optical effect which limits the total resolution of your photography — no matter how many megapixels your camera may have. It happens because light begins to disperse or "diffract" when passing through a small opening (such as your camera's aperture). This effect is normally negligible, since smaller apertures often improve sharpness by minimizing lens aberrations. However, for sufficiently small apertures, this strategy becomes counterproductive — at which point your camera is said to have become diffraction limited. Knowing this limit can help maximize detail, and avoid an unnecessarily long exposure or high ISO speed.

A rather extreme demonstration of diffraction. I built a high power laser at work just for the fun of it and tested burning through a few things. These are a couple of screen shots of the video I made on YouTube showing the laser with a very small focus diameter burning through a laser CD case. The hole burned through was well less than 1mm as I couldn't see through them holding it up to a light. The beam diverged to the back wall around 5+ mm and you can see the large diffraction rings due to the very small 'aperture' and the light disrupted from the edges.

This is similar to the effect the aperture will have in the camera but exaggerated some (ok, a lot).

The YouTube video (best viewed in full 1080HD)

Tywais...nice video & music!

This is the International Year of Light ya know!