Some image file formats are layered, other image formats are 'flat'
Examples of layered formats are
UFO - Ulead File for Objects
PSD - Adobe Photoshop
TIFF - Tagged Image File Format
Here you can have several items all stacked one on top of the other to form a picture. You can hide or erase these individual layers. If you had saved the picture on a layered format you would be able to remove the watermark layer.
Think of it like looking through a bottle. You could have layers as follows
Label (on the bottle)
The Bottle
The liquid inside the bottle
The background behind the bottle.
JPG is a flat file format - in other words it is just like a drawing on a sheet of paper.
The only resort you have is to paint it out in one of several ways.
Using Photoimpact I painted out various faults in this photograph using the method outlined
here.
There are plenty of other methods, perhaps one of the easiest to use is the clone paintbrush where you copy adjoining areas and paste them on top of the item to be erased.
