The GIF image format is limited to only 256 colors. JPEG format allows you to work with more colors. GIF images use an indexed color map (also called a color index, color lookup table, or palette) to store the colors used in the image. Each pixel in the image stores a one-byte number raging from 0 through 255, which points to a location in the palette.
The upshot is that, although you can store high-resolution images with the GIF format. Only 256 colors can be used. A good graphics program will let you set the palette of colors yourself. When a GIF file is actually displayed, the image looks like it contains a lot more than 256 colors. Colors in the pallet are dithered, which means they are mixed using alternative pixels of various colors. When an image is converted to GIF format, it will be limited to the 256 colors. A good graphics file conversion program can create a good palette.
In general, the GIF file is a good choice for line art graphics, graphics with few colors, and those that have a sharp gradation in colors between elements. There are two GIF formats, GIF87, which is the standard format and Gif89, which supports image transparency and animation. Image transparency makes the background color "transparent" so images can appear in a variety of shapes.
In addition, GIF files can be interlaced, which means that they appear progressively in the Web browser as they are downloaded. While being downloaded, interlaced GIFs are displayed as full size, but gradually improve in resolution as you`ve seen in your browser. Many graphics programs let you store GIF images as interlaced.
JPEG (often abbreviated to JPG and used as the file extension) takes it name from the group that first created the format. Unlike GIF with its restricted format, JPEG images use a virtually unlimited number of colors. The three popular formats use 256 colors (one byte per pixel, holding a color value from 0n through 255), 65,536 colors (two bytes stored per pixel), or 16,777,216 colors (three bytes stored per pixel).
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Like GIF, JPEG files are stored as compressed. JPEG is a compression technology that can store images with various levels of perfection. Conversion software will let you set how perfectly an image is stored. Although there`s less dithering with JPEG images than with GIF images, the JPEG compression format loses some precision.