File formates

JPG is a raster/bitmat file, it uses lossy compression. You would save files as JPG if you were puting it on the internet or sending to your mates. You would not use a JPG file formate for posters or profashonal use. The down side to JPG is once you have saved it to make the file smaller you can't get those colours back.

GIF files is a raster/bitmap, it uses lossless compression. You would save drawings, line art or maps in a GIF file. You wouldn't use it for photos. The down side to GIF is there's a maximum of 256 colours.

PNG is a raster/bitmap file, it uses lossless compression. You would save photos in a PNG file. You wouldn't use it in layers because it Doesn't store any additional information. The downside of PNG files is that they are large therefor takes some time to load.

PSD files is a raster/bitmap, it uses lossless compression. You would use a PSD file for layers, masks, transparency. You would not use PSD files for puting on the web because it has large file sizes. The dowside is that it takes up a lot of storage.

AI and EPS files are very simaler, they both use lossless compression. You would use them for instructs. They are no good for photos. The downside to them is you can't use photos.