When you forgot to buy Counter-Strike: Source.

A magenta-and-black checkerboard pattern that appears in games based on the Source engine whenever the engine attempts to load a texture that it cannot find. Infamous among first-time Garry's Mod users for appearing virtually everywhere when running the game without also having Counter-Strike: Source installed, as much of the user-generated content in GMod relies on that game's assets.

See also: transparent_checkerboard, for the white-and-gray checkerboard associated with JPG-ified PNGs.