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This video tutorial explains the application and differences between various file formats used to store images, including JPEG, PNG, TIFF, PSD, AI, and SVG. To understand image file formats, key concepts like raster vs. vector graphics, lossy vs. lossless compression, and color spaces are crucial. Raster formats store images as grids of pixels, while vector formats use geometric formulas. Raster formats like JPEG are best for storing photographs and images.