Imagination refers to a series of drawn images and image macros, mostly known on DeviantArt and Memegenerator. Most of the pictures show various fictional characters in a cardboard box posing with upturned arms and a rainbow shining from the left hand to the right hand with the term "Imagination" or another phrase written across the rainbow.
The original version comes from the Nickelodeon TV series "Spongebob Squarepants" in the 44b episode called "The Idiot Box" aired on March 1st, 2002. In the episode Spongebob utters the word "Imagination" while spreading his hands to create a rainbow (shown below).
SpongeBob and Patrick order a giant Television set just so that they can play in the box. They let Squidward have the TV, but when Squidward tells them their idea to play in the box is stupid, SpongeBob and Patrick deny this saying that imagination is better than Television. Squidward when he begins to leave begins to hear sound effects from the box as SpongeBob and Patrick play their "Imagination" games. Squidward asks them how is noise being made, but they deny being aware of this. They add that it is caused by "Imagination." Squidward begins to suspect later that they are using a tape recorder instead of their imaginations and so he comes into the box to find out what the sounds are caused by, but when he, Patrick, and SponeBob imagine "Robot-Pirate Island" the sounds are not heard. Squidward still believes that there is a tape recorder or anything that makes sound and so he sneaks into the box at night and imagines himself as a race car driver and he hears the sounds, but a garbage truck confuses the box to be garbage and it takes it to the dump with Squidward inside. In an epilogue, SpongeBob and Patrick go outside the next day to find their box gone, and so they decide to go to visit Squidward instead.
The first drawn picture referring to the scene (see below) was uploaded to DeviantArt on April 11th, 2005 by DeviantArt user "flowerwills".
Later, an image macro with the caption "mikey" was uploaded to Memegenerator, which describes Spongebob being offensive or being high.
Often, the phrase written on the rainbow is sardonic and profane, contrasting the childlike image of Spongebob and the rainbow with a less-than-wholesome idea.