Image file formats dictate how digital images are stored and interpreted. Pixels that make up pictures are arranged according to the specific format. Common formats include JPEG, which uses lossy compression to greatly reduce file sizes while retaining image quality. TIFF can use either lossless or lossy compression. GIF is popular for images with fewer colors and uses lossless compression, supporting up to 256 colors. PNG was created as a free, open alternative to GIF and also uses lossless compression, making it suitable for editing applications.