A packet sniffer is a utility that has been used since the original release of Ethernet. Packet sniffing allows individuals to capture data as it is transmitted over a network. Packet sniffer programs are commonly used by network professionals to help diagnose network issues and are also used by malicious users to capture unencrypted data like passwords and usernames in network traffic. Once this information is captured, the user can then gain access to the system or network.
If you want to keep information confidential or are concerned about packet sniffing, it is advised that you work on encrypted protocols and encrypt all sensitive data, such as e-mails, being sent over the Internet or network. A great encryption program is PGP, users who are using Telnet should consider using SSH instead.