Raster vs. Vector
There are two broad categories of computer graphics - vector and raster.
Raster images, also called bitmaps, consist of a grid of individual pixels where each pixel can be a different color or shade. The edge of images become jagged as they are increased. Rasters are often characterized by 3-dimensional appearance.
Common formats are GIF, JPG, BMP, TIFF, PNG, EPS. More on these later.
Example of raster style:
Vector images are composed of a collections of lines and other geometric shapes, each defined by a mathematical formula. They can be sized infinitely without pixilation. Vectors are usually characterized by 2-dimensional appearance, such as in a drawing.
Common formats are AI, other native formats, and EPS. Also, InDesign images are vector based.
Example of vector style (although it has been converted to raster):
Processing shapes and images are by default vectors. However, Processing works with many images formats.
Overview of Popular Image Formats