You can choose between four formats for the web. Use the following guidelines when choosing the format for your web image:
JPEG In most cases, this is the best format in which to save photographs.
PNG‑24 Like JPEG, this is a good format for photographs. Choose PNG‑24 rather than JPEG only when your image contains transparency. (JPEG does not support transparency; you must fill it with a matte color.) PNG‑24 files are often much larger than JPEG files of the same image.
GIF is the format to use for line art, illustrations with large areas of solid color and crisp detail, and text. Also, if you want to export an animated image, you must use GIF.
PNG‑8 is a lesser-known alternative to GIF. Use it for the same purposes (except animation).
Images in GIF and PNG‑8 formats, sometimes called indexed-color images, can display up to 256 colors. To convert an image to indexed-color format, Photoshop Elements builds a color lookup table. If a color in the original image does not appear in the color lookup table, the application either chooses the closest color in the table or simulates the color using a combination of available colors.
JPEG and PNG‑24 files support 24‑bit color, so they can display up to 16 million colors. Depending on the format, you can specify image quality, background transparency or matting, color display, and the method a browser should use to display the image while downloading.
The appearance of an image on the web also depends on the colors displayed by the computer platform, operating system, monitor, and browser. You may want to preview images in different browsers and on different platforms to see how they will appear on the web.
Reference:
http://help.adobe.com/en_US/PhotoshopElements/8.0/Win/Using/WSCB4EC73C-17F4-4c4d-887D-2E6712FE6E80_WIN.html
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