Definition:
The vast majority of non-photographic images seen on Web pages use the GIF format, although the newer PNG format is more and more popular.
GIF (Graphics Interchange Format) is a bitmap graphics format that supports transparency and animation. Developed by CompuServe, GIF is a low-resolution format best suited to on-screen display on the Web, use in online publications, and for on-screen display of screen shots.
Images with large expanses of flat color or those that require transparency (such as transparent backgrounds) are best-suited to the GIF format. Because GIF reduces images to 256 colors or less it is less suitable for images with millions of colors, such as photographs, although small photos can work well as GIF.
Pronunciation: I say jif just like the inventors of GIF but some still insist on gif with a hard g. Ignore them. The GIF Pronunciation Page
Examples:
"In the sidebar image the graphics on top illustrate the type of images — screen shots, flat color, transparent backgrounds — that are best served online with GIF. On the bottom is a photograph saved as a GIF." (In this example I've exaggerated the effect of using GIF for a photo - they can be made to look better than this although it may increase file size.)
