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A style of art.... it is trendy, but it is supposed to look... you know.... grungyish.... lol. You mainly use brushes that are dirty looking and paint a background using diffrent layer styles and such. I kinda suck at explaining these things so.... yeah :P
Grunge means that you make it look dirty, beaten up, broken, messy, really dusty, scratched, etc.
It's basically because perfect-looking images can't really happen very often in real life, so these look more realistic.