The Hologram ability is a special power in the Halo series which made it's first appearance in Halo: Reach but returned in Halo 4. It essentially throws out a hologram to confuse an opponent.
While they are sometimes easy to spot, in the middle of a frantic battle nobody is calm enough to do much checking. It is a good way to test to see if there is a sniper with a view of where you want to go. It's my personal favorite armor option in Halo: Reach and Halo 4.