They originated in Europe to indicate the country where the car was registered. Now they are common tourist souvenirs.
From Wikipedia (ironically includes an image of the oval for Switzerland, where my family is from):
“One variety of bumper sticker is the country tag. This is typically used for cars crossing international borders, and is overseen by the United Nations as the Distinguishing Signs of Vehicles in International Traffic, being authorized by the UN’s Geneva Convention on Road Traffic (1949) and Vienna Convention on Road Traffic (1968). Often the country code is displayed on the license plate itself.
“These have (usually in the United States) been spun off into tags indicating a country with which the driver affiliates, or more humorously to indicate things like a city (OBX), political party (GOP), etc.”
Here are the European country codes:
http://en.wikipedia.org/wiki/List_of_international_license_plate_codes