Creating a Literal HTML5 'Canvas'

Hello everyone!

I was wondering, is it possible to create a HTML5 Canvas where users could literally select different tools (ex. marker, eraser, pencil, etc.) and colors and draw over a certain picture in the background. Essentially, is it relatively easy to find or create a web-based Paint application for a website?

Thanks in advance

Essentially I'm looking for something like this: http://canvaspaint.org/
But more integrated into my website. Just wondering whether this is feasible.

Hi there, thanks so much for the response!

I really have no clue how to implement any of those, but I really liked the "Mugtug" tool. Is there a more simple way to do this or is it beyond me?