How do I build an 'embeddable widget'?

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My webapp uses both Rails and JS and I would like users to be able to embed the images they upload to any blog/site.

What do I need to know, from a development point-of-view to allow me to create the functionality that generates an 'embed' link. It can be either a link like YouTube does, or a JS snippet or anything.

Just want to get a high-level overview of what I need to be able to do and how to proceed.

Thanks.

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