Bipmapped files are made of tiny dots. They can be made smaller, but become more and more jagged as they're made larger. Vector graphics are lines or fills enclosed within lines. They may be scaled either larger or smaller without losing sharpness.
Note: When using spot or named colors in a graphic that will be part of a larger printed publication, the color names must EXACTLY MATCH the names used in the publication or extra printing plates will be made for each difference. This raises the cost unnecessarily and will delay a print job.
There are more file types than the following, but these are the most common.
JPG (or JPEG)
Bitmap. This is a lossy form of compression. High quality JPGs will look well printed, but the file size will be quite large and your friends will be unhappy receiving them attached to emails. Low quality JPGs have had a lot of their pixel information thrown away or "lost." They are suitable for emailing and viewing on a computer screen. Keep in mind that once a file is saved at a low resolution it can never be returned to its original clarity. Preserve your originals and save your lower resolution files with a different name.
Bitmap. These files are low resolution and are limited to 256 colors which makes them suitable for logos, icons, and graphics with solid colors. They are not suitable for photos or printed materials. GIF files use lossless compression—no information is thrown away in the compression process.
TIF (or TIFF)
Usually bitmap. These files are uncompressed, stable, and are preferred for photos and graphics going to a commercial printer. They may be compressed with WIN_ZIP or Stuffit without compromising their integrity.
EPS — encapsulated postscript
These files can be either bitmap or vector. If a bitmap, then they can be resized smaller, but will become jagged when made larger. Vector files can be used at any size. Warning: When a font is used in an eps graphic, the person viewing or using that file MUST have the same font on their computer or another font will be substituted — usually an ugly one. You can get around this by converting anything in a font to "paths." However this makes it uneditable, so keep your original. High resolution eps files are good for importing into projects going to a commercial printer.
PDF — portable document format
Adobe has made this the industry standard for saving files containing text and graphics so they will look the same no matter which operating system is used or what fonts are installed. For this to work, you must embed the fonts in the file. Set it to embed all fonts at 100%. The fonts will scale up and down, but documents with graphics can only be made smaller.