Image compression is the process of reducing file size while maintaining acceptable image quality. There are two main types: lossy and lossless compression.

Lossy compression (like JPG) removes some image data to achieve smaller file sizes. This is ideal for photographs where minor quality loss is acceptable. Lossless compression (like PNG) preserves all image data, making it perfect for graphics and logos.

Understanding when to use each type is crucial for web performance. Use lossy compression for photos and lossless for graphics with text or sharp edges.