So, like, you know how there are Waterbenders, Airbenders, Firebenders and Earthbenders? Those are just the original forms of bending. Some folks have discovered that they're able to push the limits of their skills to create entirely new ability sets. And that's awesome -- it's how metal-bending and lightning re-direction were discovered by Earthbenders and Firebenders. Waterbending can become very creepy when you start to think about how the human body is mostly H2O; if a bender can manipulate the water in a person, they can manipulate the person.
In the episode The Puppetmaster, the gang meets a seemingly sweet old person in the woods on Fire Nation territory. (Spoilers: She's actually bad.) This old nana named Hama offers them food, warmth, and a safe place to stay, after warning the group that villagers have been going missing in the area recently. Hm... suspicious, lady. Very suspicious.
It turns out that the Hama is actually a member of the Southern Water Tribe. This is a bonding point for Katara and Sokka, who are from the same place. Hama explains that she was captured by the Fire Nation during a raid, and they killed every last member captured except her. She doesn't go into how she escaped right away, and for good reason. As it turns out, the Fire Nation treated their prisoners so badly that Hama went absolutely revenge-hungry nuts.
As she tells it, Hama's Fire Nation captors removed all water from the area surrounding her prison. All water -- except for the water within the guards' bodies. That's when Hama realized that water exists in all living things. First, she practiced on rats. After a year fews, she was able to control a Fire Nation stooge, using him to make her escape.
Katara, god bless her, wants nothing to do with Hama's disturbing "bloodbending." When Katara refuses to participate in such a dark use of waterbending, Hama becomes furious. With the help of water drawn from local plant life, Katara almost takes down Hama, but that's when Aang and Sokka bust in and give Hama new weapons: their bodies.
Hama's bloodbending is about to prove fatal for Aang and Sokka, so Katara has no choice but to use bloodbending herself.
Katara bloodbends Hama, saving her friends -- but at a steep cost. All along, Hama wanted to pass down her abominable technique, and now the terrible art is in the hands of the young Waterbender. Katara knows it, too, and realizes it's something she can never un-learn.
Excuse me while I throw up.