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In this video tutorial, the difference between an uncompressed image and a compressed JPEG image is demonstrated. The compressed image uses significantly less space while maintaining image resolution and quality. The video delves into the JPEG algorithm, which allows images to be compressed to just a tenth of their original file size. It highlights the importance of this algorithm, as most digital images are saved in JPEG format. Additionally, the prevalence of JPEG images and other video compression algorithms, such as H.264, is discussed.