There are two main type of image files: Raster and Vector.
Before moving to vector and raster graphics, let us get closer to few terms:
Pixel:
It is the basic unit of programmable color on a computer display or in a computer image. It is one of the smallest dots and also physical point on the picture. Most of the picture that we can see in the computer are raster image. The picture we take from the camera is another example of raster image.
Simply, pixel is the smallest single element in a display device.
Bitmap:
In computer graphics, a bitmap is a mapping from some domain (for example, a range of integers) to bits, that is, values which are zero or one.

Raster Graphics
Raster image use bit maps to store information in the memory, which can be stated as the larger file needs large bitmaps, lager the file means more disks space. It is the collection of individual pixels of color.
If we zoom in to a raster image we may see a lot of little tiny squares.
Common File extensions: .BMP, .TIF, .GIF, .JPG
Vector Graphics
Vector graphics are not composed of pixels they are resolution-independent.
Vector Graphics is referred to, use of sequential commands or mathematical statements or programs that position lines or shapes in a 2-D or 3-D world. The best for printing is vector graphics since it is composed of a series of mathematical curves.
Common File extensions : .SVG, .EPS, .PDF, .AI, .DXF
SPEAKING THE DESIGNS –Ambarish Adhikari