Understanding Basic File Types in Simple Terms
PSD This is the native file format for Photoshop. Once you have more than one layer, JPEG files turn into PSD files. These files are NOT universal. You must save the file in another format before using it outside of Adobe products. I suggest you save your work as a PSD until you are ready to use it because it is *lossless.
JPEG This is a popular, universal file format. It is often used for photos because it supports a large number of colors. JPEG files only have one layer. If you save your working file as a JPEG, your image will automatically be flattened. JPEG files are *lossy. However, Photoshop allows you to select how much compression you use. See examples below.
TIFF This file is used for the highest quality photos. It supports many colors. The files are very large because they are *lossless. TIFF files are not used online very often due to the size of the files. The file is universal.
GIF This is a simple file that will only support 256 colors. Do not save a photograph as a GIF because it will limit the colors and detail that you expect to see. It is used for simple colored logos and line art. This file supports transparency, but it will not support gradients. Simple animations are often created as GIF files. GIF files are universal.
PNG Think of a PNG file as a “new and improved” GIF. It holds more colors, supports transparency, AND it will work with gradients. A regular PNG will not support animation. However, there is a newer version called a APNG that will support animation.
DNG A DNG file is a RAW file. Think of DNG files like a digital negative of a photograph. Cameras have a RAW setting that allows the user to edit the photos.
When you save a file, the file compresses. I think of it like packing a suitcase. The compression type that you select is important because it can affect the file when it is reopened.
Lossless files are often larger files. Everything is packed nice and neat when the file is closed and is compressed. When it is reopened there is no degradation. All of the pixels are in good quality.
Lossy files are smaller because each time the file is closed a part of the quality is lost. When you reopen the file the file has some degradation. You may not notice the damage at first, but after a while it is noticeable. I do not recommend saving your file as a lossy file type until you are finished editing it.
If you use a JPEG file you can select the amount of compression that will occur (see Fig. 1). Selecting Maximum quality will be a larger file, but the image will not suffer much loss.
Note the examples below. Figure 2 on the left is a JPEG saved at Maximum quality. The file was not compressed very small. When the file was reopened only a slight quality difference was noticed. The photo on the right was saved as a JPEG at the Lowest quality. This means that the file was compressed to a very small file size. The degradation is noticeable in the pixel loss.