Inside the .kml file are the geographical coordinates stiored of the associating image.

File location:

The location of the file is not mandatory as long as it is in the same folder with the raster image file that it is associated with.

Variables:

The KML file is described by Google in the KML Tutorial. More information can be found there: http://code.google.com/intl/nl/apis/kml/documentation/kml_tut.html

sample file: