All image files can be categorized into two kinds, BITMAP and VECTOR files. The two differ in the way computers analyze their content.
VECTOR ART is key for many print projects. The best choice for logos and other line art is a VECTOR .eps file (encapsulated postscript). Eps files are typically generated from vector based programs such as Adobe Illustrator, Freehand or CorelDraw. Eps files are fully scaleable and are not suspectible to distortion. Also, colors are easily specified in vector programs, which comes in handy if your project is going to be produced with spot colors. Since the art is made from a series of mathematical curves, it will print very crisp even when resized. For instance one can take the same vector logo and print it on a business card, and then enlarge it to billboard size and keep the same crisp quality. A bitmap graphic would blur incredibly if it were enlarged from business card size to billboard size. File names for vector images usually have extensions such as .eps, .ai, .cdr, or .dwg.
VECTOR files are more suitable for illustrations that require precise measurements. They are also easily scalable due to their mathematical nature. However, the vector-based file format has its drawbacks as well. It is not good for displaying photo-realistic images such as a photograph because images of this type generally do not contain well-defined shapes and curves.
BITMAP ART, on the other hand, does not rely on mathematical formulas to define their various elements. Each bitmap image is mapped into a grid. The size of the grid is based on the image's resolution. A bitmap image is like a mosaic of pixels with each pixel holding a specific color value.
BITMAP files are more suitable for photo-realistic images that require complex color variations. They are, however, not easily scalable because each bitmap image is mapped to a non-flexible grid. If a bitmap image were to be enlarged, it would lose its sharpness. All edges within the image would appear to be jagged. File names for bitmap images usually consist of extensions such as .psd, .jpg, gif, .tif, or .bmp.