The Underlying Difference
Graphic files exist in 2 varieties: VECTOR and RASTER. These terms refer to the construction of the file and how the software created the shapes displayed.
RASTER is the format used to save photos. The most familiar extensions would be jpg, tif, psd, gif or bmp. These graphics are made up of pixels or dots. Each pixel is assigned a specific colour and a size determined by the resolution set at the time of saving. Scaling a RASTER enlarges each pixel and they become more obvious as you can see below.
Here is a close-up of a raster version of our design squirrel’s tail: