RAW data (which Nikon calls NEF data) is the information from each of the Red, Green and Blue pixels (Picture elements) on the Image Sensor in the camera, after it has been converted to a digital number. During the capturing of this data, the "ISO" (Relative Sensor Speed, also known as Film Speed in traditional Film Cameras) is set using amplification. If little amplification is used on the data, then a low ISO will be set (like ISO 100) If much amplification is used, then a high ISO setting will be used (like ISO 1600).

RAW data is not compressed. After the data has been captured, it can be stored on the camera's memory card or it can be further processed into a JPEG image.

Advantages of Saving Images as RAW files:

Although you can't change the exposure or the ISO, you can change many other shooting parameters after you take the picture.
You can convert the RAW file to an 8-bit or 16-bit TIFF file. RAW data from most high end digital cameras uses 12-bit data. The color-brightness information is stored in 8 bits (which gives you 256 levels of intensity for each pixel) and the other 4 bits are available for image manipulation. This allows you to perform broader manipulations to the image without losing quality. So, if you want to use all 12 bits of the RAW image for editing, then you'll want to convert it to a 16-bit TIFF file. Once you've made your editing changes, then you can convert it to an 8-bit TIFF or 8-bit JPEG for printing.

2. TIFF (Tagged Image File Format)

TIFF files sizes are larger than JPEG files, but they retain the full quality of the image.

They can be compressed and uncompressed without losing quality. The compression scheme used on a TIFF file is called "lossless", which means no information is lost even though the file is made smaller.

Here's is an example that is similar to how Lossless compression works on a TIFF file:

Let's use a string of digits to represent the levels of brightness that have been sensed by a row of 20 pixels on the Image Sensor:
11111333333333222222

We want to keep this simple, so we will use a single digit to represent the intensity for each pixel. The compressed form would look like the following:
1(5)3(9)2(6)

The number one is repeated 5 times, number three is repeated 9 times and number two is repeated 6 times. You have the same information, but in compressed form the data takes up less space.

3. JPEG (or JPG, Joint Photographic Experts Group)

Advantages of Saving Images as JPEG files:

The main advantage of using JPEG is that you can get more images on a memory card and it saves faster because it's a smaller (compressed) file. If you shoot RAW files, then you will have to convert them to TIFF or JPEG on a PC before you can view or print them.
JPG is the most popular format for displaying photographs on the Web. (It can also be used for illustrations and graphics that have many colors and complicated shading.)
JPEG uses a "lossy" compression scheme (which will lose quality) but you can vary the amount of compression that is used to trade off file size with image quality.

CAUTION: Every time you open a JPEG file and then save it, the image is compressed. As you go through a series of saves, the image is increasingly degraded.

Instead of saving an original image as a JPEG file, (especially if you expect to modify it later), save it in a loss-free format like RAW or TIFF and with maximum color depth.

Then every time you need to make changes, make a copy from the original and work with the copy. Keep the original untouched and use it only to make copies from.

If you know you have the right exposure and parameter settings, then capturing a good JPEG image will be equivalent to an image converted from a RAW file.
You would save as a RAW image if you plan on doing some post exposure processing or if you are uncertain about the exposure and parameter settings.

For maximum flexibility, some cameras can store a JPEG image in addition to the RAW file. There are also cameras that store a small "thumbnail" with the RAW file which can be quickly displayed so you don't have to convert the RAW image in order to see it. Of course, the downside to having dual images is that it takes up more storage space.

Resolution

The quality of a digital image depends on the number of pixels that are used to capture the image. The maximum number for a given digital camera depends on how many pixels are on the Image Sensor in the camera. The more on the Image Sensor, the more expensive the camera.

Resolution can also refer to the total number of pixels in an image. If you have a camera with a stated resolution of 1600 x 1200 pixels, it can also be referred to as a 2 Mega pixel camera.
(1600 multiplied by 1200 = 1,920,000 or rounded up to 2 million).
Some professional cameras now go up to 12 million pixels.

More pixels add detail to an image and will also sharpen edges. But, if you enlarge any digital image enough, the individual pixels will begin to show. This effect is called Pixelization.

Here's a table that compares the resolution and number of pixels in TVs and Cameras with the human eye.
Did you realize the human eye was so complex?

ITEM	RESOLUTION in PIXELS	TOTAL PIXELS
Color TV (NTSC Analog)	480 scan lines x 720 pixels/line	345,600
HDTV (High Definition)	1,080 scan lines x 1,920 pixels/line	2,073,600
Computer Monitor (XGA)	1024 Horizontal x 768 Vertical	786,432
Consumer Digital Camera (Pentax Optio 230)	1600 x 1200	1,920,000
Nikon D70 Digital Camera (6 Mega pixel)	3008 x 2000	6,016,000
Color Print from Film Camera (6" x 4" print. A rough average, it depends on many factors)	1800 x 1200	2,160,000
Human Eye	11,000 x 11,000	121,000,000

Optical and Interpolated Resolutions

Cameras, as well as scanners, have two kinds of resolution: Optical & Interpolated.
The maximum optical resolution of a camera or scanner is a fixed number that does not change. It is based on the maximum number of pixels in in the Image Sensor device in that piece of hardware.

To magnify an image beyond the available pixels, software can be used to define virtual pixels between the real pixels. This is accomplished using interpolation which does not increase the actual detail of the image, as optical resolution does. The software determines the value of the real pixels that surround the virtual pixel, and then determines what color should be assigned to the virtual pixel. As new virtual pixels are added, the image and the file size are made larger.

This is also what happens in a photo editing program when you have a small image and want to "save it or resample it" as a larger image. To do this, the program will do interpolations and create new pixels in between the existing pixels.

When you buy a scanner or digital camera, make sure that the resolution you think you are getting is the Optical Resolution and not the Interpolated Resolution. If a company promotes the Interpolated Resolution of a product, you can be fooled into thinking you are getting more than you really are.

If you don't own a digital camera, then you will find the next section Buying A Digital Camera, very helpful, . I'll discuss the different types of digital cameras and the features to consider when you buy a digital camera.