More colors in the image will have a sharper image but larger file size.
Image quality and file size are tied to the number of colors. Ability to create animated images and messages. Images are sequenced on top of each other to create motion. GIF is a raster format that allows you to have animated images. Use a PNG for graphics that need to be placed on non-white backgrounds, such as all-white logos on a black background. PNGs are best for graphics with sharp edges, text graphics, logos, icons and other designs. Can be compressed without losing as much quality as a JPG. Ability to have a transparent background for layering your image on colored backgrounds. PNG can support more colors (over 16 million) and support transparent backgrounds, or an alpha channel. PNG is another common raster format that is more versatile than a JPG. JPGs are best for non-moving photos and other files that don’t require transparent backgrounds. JPGs do not support transparent backgrounds. Image quality can be greatly reduced if compressed too much. JPG or JPEG is the most common raster file format for images. SVG and GIF are best suited for vector images, while you can also save a vector graphic as a JPG or PNG, however you lose the ability to scale your graphic infinitely. Vector graphics are created with vector software and can be infinitely sized without losing quality. JPG, PNG and GIF are formats best suited for raster images. These images have a finite number of pixels and can lose quality when scaled larger. Raster images are created with pixel-based programs or captured with a camera or scanner. Your image or graphic should be saved to a particular format based on if it’s a raster or vector. Each file format has its benefits, drawbacks and intended use case. 
There are four major file formats for saving out images and graphics for the web: JPG, PNG, GIF and SVG.
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