I have never heard or seen this before. I just unplugged my earbuds, and there was no sound. Tried changing the volume, just got this.
I went to sound, and the internal speakers weren't even an option.
I went back to plug in my earbuds to see if they still worked, and there was a red glow coming out of my macbook. The earbuds worked, but once unplugged the red glow came back. After a reboot it was all better, sound works fine.
The weird thing is, I didn't do anything weird to change it. Its the first I've ever heard of it, and I thought it was pretty neat, so there you go.
Edit: This is a Late 06 MacBook, so if you have one, you have this too...

I went to sound, and the internal speakers weren't even an option.

I went back to plug in my earbuds to see if they still worked, and there was a red glow coming out of my macbook. The earbuds worked, but once unplugged the red glow came back. After a reboot it was all better, sound works fine.

The weird thing is, I didn't do anything weird to change it. Its the first I've ever heard of it, and I thought it was pretty neat, so there you go.
Edit: This is a Late 06 MacBook, so if you have one, you have this too...