Image Formats & File Types
TIFF
These types of image formats are a very flexible format that can be lossless or lossy. The details of the image storage algorithm are included as part of the file. In practice, TIFF is used exclusively as a lossless image storage format that uses no compression. Most graphics programs that use TIFF do not use compression. Consequently, file sizes are quite big. (Sometimes a lossless compression algorithm called LZW is used, but it is not universally supported.)
PNG
These types of image formats are also a lossless storage format. However, in contrast with common TIFF usage, it looks for patterns in the image that it can use to compress file size. The compression is exactly reversible, so the image is recovered exactly.
GIF
These types of image formats create a table of up to 256 colours from a pool of 16 million. If the image has fewer than 256 colours, GIF can render the image exactly. When the image contains many colours, software that creates the GIF uses any of several algorithms to approximate the colours in the image with the limited palette of 256 colours available. Better algorithms search the image to find an optimum set of 256 colours. Sometimes GIF uses the nearest colour to represent each pixel, and sometimes it uses "error diffusion" to adjust the colour of nearby pixels to correct for the error in each pixel.
GIF achieves compression in two ways. First, it reduces the number of colours of colour-rich images, thereby reducing the number of bits needed per pixel, as just described. Second, it replaces commonly occurring patterns (especially large areas of uniform colour) with a short abbreviation: instead of storing "white, white, white, white, white," it stores "5 white."
Thus, GIF is "lossless" only for images with 256 colours or less. For a rich, true colour image, GIF may "lose" 99.998% of the colours.
JPG
These types of image formats are optimised for photographs and similar continuous tone images that contain many, many colours. It can achieve astounding compression ratios even while maintaining very high image quality. GIF compression is unkind to such images. JPG works by analysing images and discarding kinds of information that the eye is least likely to notice. It stores information as 24 bit colour. Important: the degree of compression of JPG is adjustable. At moderate compression levels of photographic images, it is very difficult for the eye to discern any difference from the original, even at extreme magnification. Compression factors of more than 20 are often quite acceptable. Better graphics programs, such as Paint Shop Pro and Photoshop, allow you to view the image quality and file size as a function of compression level, so that you can conveniently choose the balance between quality and file size.
RAW
These types of image formats give an image output option available on some digital cameras. Though lossless, it is a factor of three of four smaller than TIFF files of the same image. The disadvantage is that there is a different RAW format for each manufacturer, and so you may have to use the manufacturer's software to view the images. (Some graphics applications can read some manufacturer's RAW formats.)
BMP
These types of image formats are an uncompressed proprietary format invented by Microsoft. There is really no reason to ever use this format.
PSD, PSP, etc.
These types of image formats are proprietary formats used by graphics programs. Photoshop's files have the PSD extension, while Paint Shop Pro files use PSP. These are the preferred working formats as you edit images in the software, because only the proprietary formats retain all the editing power of the programs. These packages use layers, for example, to build complex images, and layer information may be lost in the nonproprietary formats such as TIFF and JPG. However, be sure to save your end result as a standard TIFF or JPG, or you may not be able to view it in a few years when your software has changed.
Currently, GIF and JPG are the formats used for nearly all web images. PNG is supported by most of the latest generation browsers. TIFF is not widely supported by web browsers, and should be avoided for web use. PNG does everything GIF does, and better, so expect to see PNG replace GIF in the future. PNG will not replace JPG, since JPG is capable of much greater compression of photographic images, even when set for quite minimal loss of quality.