What is shown
The picture shows a large face with furrowed brows, narrowed eyes, and a tense mouth. The drawing is crude and deliberately harsh, typical of rage comics. A hand points at the viewer with two fingers, as if singling out someone who's just been caught doing something shady.
The gesture of two extended fingers, pointed first at the eyes and then at the person being watched, makes the image recognizable even without a caption. The facial expression works as a ready-made "I see everything" signal, which is why the character transfers so easily to all kinds of situations.
Origin
The image appeared in 2011. The face was drawn in MS Paint, and a YouTube creator recorded the drawing process on video on August 19, 2011. That recording is considered one of the first documented appearances of the image.
That same day, an artist on DeviantArt posted an illustration captioned "te estoy vigilando" ("I'm watching you"). It is not possible to establish who actually came up with the face's design: authorship is blurred between the video's creator and the illustrator, and the question remains open.
Soon after, the image spread through Spanish-language communities: on September 21, 2011, the site Cuánto Cabrón published a comic in which a man doesn't want to share his fries with a friend. English-language caption collections then spread across FunnyJunk, and by 2012 the character had become part of Reddit's standing set of reaction images.
How it's used
A typical caption sets up an everyday situation, with the final line landing as a threat. For example, a neighbor playing music too loudly, or a friend who stole the last slice of pizza — and at the end, the familiar face appears with the caption "I'm watching you."
In gaming and online communities, the meme is used when someone stays quiet in voice chat despite clearly being up to something, or when you're being eyed with suspicion in a chat. The caption turns a minor annoyance into an excuse for joking surveillance.
Versions with other captions show up constantly: the character watches a guy making a move on someone else's girlfriend, or watches over cables someone left tangled on a desk. The format allows for endless variations, and each one adds a new small situation to the image.
Why the meme works
The humor is built on a mock threat. A serious face is applied to utterly trivial causes, and the gap between the scale of the reaction and the triviality of the matter gets the laugh. The setup of "someone stole a cookie, and now they're being watched" reads instantly.
The rage comics aesthetic reinforces the effect: the crude lines and lowered brows make the stare expressive and a little comical. The character needs no explanation, so it's understood at a glance.
The meme also works well as a joking warning: "I know, and I won't forget it." That's what makes it useful in chats, where you want to hint that a transgression has been noticed without escalating to a real accusation.