There are two types of image files, raster and vector. The most common type of raster graphic is a photograph while the most common types of vector graphics are fonts and logos.
A raster graphic is an image made of hundreds or thousands of tiny squares of color information, referred to as either pixels or dots. Creating or editing an image with pixels allows you to provide rich detail in an image. Because every pixel can be a different color, you can allow for any kind of color change. Raster images are wonderful for rendering vivid, full-color images, like photographs, but lose clarity when enlarged and require precise editing.
A vector graphic is an image made of points, lines and curves. So whereas a raster image of a 1” x 1” square at 300 dpi (dots per inch) will have 300 individuals pieces of information, a vector image will only contain four points, one for each corner, and the computer will use math to “connect the dots” and fill in all of the missing information. Vector images are infinitely scalable and easily editable but are not practical for complex images that require lush color depth.