Quick Overview
Please note that there are different common names for this artifact.

During frequency encoding, fat protons precess slower than water protons in the same slice because of their magnetic shielding. Through the difference in resonance frequency between water and fat, protons at the same location are misregistrated (dislocated) by the Fourier transformation, when converting MRI signals from frequency to spatial domain. This chemical shift misregistration cause accentuation of any fat-water interfaces along the frequency axis and may be mistaken for pathology. Where fat and water are in the same location, this artifact can be seen as a bright or dark band at the edge of the anatomy.
Protons in fat and water molecules are separated by a chemical shift of about 3.5 ppm. The actual shift in Hertz (Hz) depends on the magnetic field strength of the magnet being used. Higher field strength increases the misregistration, while in contrast a higher gradient strength has a positive effect. For a 0.3 T system operating at 12.8 MHz the shift will be 44.8 Hz compared with a 223.6 Hz shift for a 1.5 T system operating at 63.9 MHz.

For artifact reduction helps a smaller water fat shift (higher bandwidth), a higher matrix, an in phase TE or a spin echo technique. Since the misregistration offset is present in the read out axis the patient may be rescanned with this axis parallel to the fat-water interface. Steeper gradient may be employed to reduce the chemical shift offset in mm. Another strategy is to employ specialized pulse sequences such as fat saturation or inversion recovery imaging. Fat suppression techniques eliminate chemical shift artifacts caused by the lack of fat signal.

See also Black Boundary Artifact and Magnetic Resonance Spectroscopy.

(BW) Bandwidth is a measure of frequency range, the range between the highest and lowest frequency allowed in the signal. For analog signals, which can be mathematically viewed as a function of time, bandwidth is the width, measured in Hertz of a frequency range in which the signal's Fourier transform is nonzero.

A higher bandwidth is used for the reduction of chemical shift artifacts (lower bandwidth - more chemical shift - longer dwell time - but better signal to noise ratio). Narrow receive bandwidths accentuate this water fat shift by assigning a smaller number of frequencies across the MRI image. This effect is much more significant on higher field strengths. At 1.5 T, fat and water precess 220 Hz apart, which results in a higher shift than in Low Field MRI.
Lower bandwidth (measured in Hz) = higher water fat shift (measured in pixel shift).

See also Aliasing, Aliasing Artifact, Frequency Encoding, and Chemical Shift Artifact.

Quick Overview
Please note that there are different common names for this artifact.

Black boundary artifacts are black lines following voxels where both water and fat protons are present in the same voxel. This artifact arise along the boundary of organs or tissues perpendicular to the frequency encoding direction, and occurs preferentially in gradient echo sequences with out of phase echo times.

Fat suppression techniques eliminate this artifact. For artifact reducing helps a smaller water fat shift (high bandwidth), a higher matrix or/and an in phase TE.

See also Chemical Shift Artifact.

Chemical shift depends on the nucleus and its environment and is defined as nuclear shielding / applied magnetic field. Nuclei are shielded by a small magnetic field caused by circulating electrons, termed nuclear shielding. The strength of the shield depends on the different molecular environment in that the nucleus is embedded. Nuclear shielding is the difference between the magnetic field at the nucleus and the applied magnetic field.
Chemical shift is measured in parts per million (ppm) of the resonance frequency relative to another or a standard resonance frequency.
The major part of the MR signal comes from hydrogen protons; lipid protons contribute a minor part. The chemical shift between water and fat nuclei is about 3.5 ppm (~220 Hz; 1.5T). Through this difference in resonance frequency between water and fat protons at the same location, a misregistration (dislocation) by the Fourier Transformation take place, when converting MR signals from frequency to spatial domain. This effect is called chemical shift artifact or chemical shift misregistration artifact.

Image artifact of apparent spatial offset of regions with different chemical shifts along the direction of the frequency encoding gradient; a similar effect may be found in the slice selection direction.

See Chemical Shift Artifact.