Re: First POV trial
PNG compression works by making a raster of the colors used in the image rather than all the colors (like a BMP would). It's lossless, which is sweet, but if you use lots of colors the filesize gets large. You can also pick a maximum number of colors, and the image program will change each pixel to the closest one of a set. This sets a maximum on the file size, which is handy. PNG is the best for cartoon-style images with few colors.
JPEG does some frequency analysis and breaks the image into blocks, each block being colored by a pattern. Near edges, the blocks are small, in large areas with smooth coloring the blocks will be large. Then the image is Huffman-encoded (like a zip file), saving more space. Typically JPEGs are good for real-life pictures, since it handles lots of colors well, but the area near edges can look murky if the compression ratio is set too high.
At least, this is what I remember as the basic design philosophy of the two types.