Bitmap is a very precise format, in much the same way as TIFF. Bitmap has no form of compression whatsoever, so the image filesize becomes massive, especially with larger images. The upside of BMPs is that the processing time a computer will take to load them is very low - this is why they are often used for textures and artwork in computer games, as streaming them off disk is quicker than streaming a smaller file (i.e. JPEG) and then decompressing it.
Jpeg is a format that uses a clever series of algorithms and compression formulas to drastically reduce filesize. Image quality does suffer, but variable amounts of compression are possible. The key idea with the JPEG format is dividing the image up into smaller squares - if you have a blue sky, it is unnecessary to record information about every single pixel - if a group of pixels next to each other are roughly the same colour they can be grouped together as being one "big pixel". The bigger these big pixels are, the more compression is possible. This is why JPEG images of the sky or a very plain object will be smaller than a similarly sized image of a complex object - i.e. a group of people. The key concept is what you define as "roughly". With low compression only very similar pixels will get grouped together. With very high compression, a lot of pixels will get grouped together resulting in visible "artefacts" on the image. Because of the way JPEGs work, the format is well suited to photographic images where 100% precision is not necessary. It also is very flexible in terms of colour depth, meaning you can get some very rich looking images.
Example 1 - low compression - photo looks almost perfect, 23kb.
Example 2 - medium compression - photo looks almost OK, 7kb.
Example 3 - high compression - artefacts are clearly visible, 3kb.
Jpeg is not as well suited to images where precision is important - i.e. where text is used, such as logos or headings. On this kind of image, even at low compression the drop in quality is noticable.
For this kind of image, formats such as GIF or PNG are best. Both are quite similar - GIF is quite an old format pioneered by Compuserve, and PNG is a more recent invention. A down side with GIF files is that image is restricted to 255 colors - this makes photographs look quite poor - notice the patchiness of the background in the image below:-
PNG is superior, and allows more colors, with no loss of quality. This does however mean larger filesizes than JPEGs for most types of images.
TIFF is a bit of an ancient technology which has it's own forms of compression available. The end result tends to be closer to the GIF / PNG route. TIFF is often favoured by graphic designers, as there is no loss at all in quality.
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