The resolution refers to the density of pixels that make up a digital image when displayed on a screen or printed. It is measured in pixels or dots per inch, where a higher resolution means more pixels packed into a given space, resulting in a sharper and more detailed image. Common file formats for digital images include BMP, TIFF, GIF, JPEG, PNG, and CDR, each with different capabilities regarding things like compression, animation, transparency, and compatibility across programs and platforms.