Vector images are scalable as they are based on mathematical formulas, while bitmap images map colors to grids so they are not easily scalable and enlarging distorts lines. Vector files like EPS and AI contain shapes while bitmap files like JPG and PNG are for photos. Embedded images are stored inside documents while linked images remain outside but linked. GIF limits colors to 256 so is best for simple images, while JPEG can show complex color ranges for photos. Lossless compression like ZIP reversibly compresses files without quality loss, unlike JPEG which can lose excess data imperceptibly. PNG overcomes issues with JPEG blurring text and GIF lower quality at high resolutions.