You can find brief explanations of compression settings by choosing Show Balloons from the Help menu and pointing at the controls in the Preferences... dialog box. This file contains rather more technical explanations, most of which have been copied from the documentation accompanying the Independent JPEG Group's library, libjpeg.
JPEG (pronounced "jay-peg") is a standardized compression method for full-color and gray-scale images. JPEG is designed to handle "real-world" scenes, for example scanned photographs. Cartoons, line drawings, and other non-realistic images are not JPEG's strong suit; on that sort of material you may get poor image quality and/or little compression.
JPEG is lossy, meaning that the output image is not necessarily identical to the input image. Hence you should not use JPEG if you have to have identical output bits. However, on typical real-world images, very good compression levels can be obtained with no visible change, and amazingly high compression is possible if you can tolerate a low-quality image.
This setting lets you trade off compressed file size against quality of the reconstructed image: the higher the quality setting, the larger the JPEG file, and the closer the output image will be to the original input. Normally you want to use the lowest quality setting (smallest file) that decompresses into something visually indistinguishable from the original image. For this purpose the quality setting should be between 50 and 95; the default of 75 is often about right. If you see defects at quality 75, then go up 5 or 10 counts at a time until you are happy with the output image. (The optimal setting will vary from one image to another.)
Quality values above about 95 are not recommended for normal use; the compressed file size goes up dramatically for hardly any gain in output image quality. (If quality 95 isn't good enough, try turning off "Downsample chroma components". Also, reduce or turn off smoothing to achieve highest quality.)
In the other direction, quality values below 50 will produce very small files of low image quality. Settings around 5 to 10 might be useful in preparing an index of a large image library, for example. Try quality 2 (or so) for some amusing Cubist effects.
Smoothing filters the input to eliminate fine-scale noise. This is often useful when converting GIF files to JPEG: a moderate smoothing factor of 10 to 50 gets rid of dithering patterns in the input file, resulting in a smaller JPEG file and a better-looking image. Too large a smoothing factor will visibly blur the image, however.
Even for full-color input data, a small amount of smoothing is often useful, because it reduces the compressed file's size without materially affecting quality. But you should reduce or turn off smoothing if you want highest quality.
Perform optimization of entropy encoding parameters. Without this, default encoding parameters are used. This option usually makes the JPEG file a little smaller, but takes a little longer. Image quality and speed of decompression are unaffected.
This switch creates a "progressive JPEG" file. In this type of JPEG file, the data is stored in multiple scans of increasing quality. If the file is being transmitted over a slow communications link, the decoder can use the first scan to display a low-quality image very quickly, and can then improve the display with each subsequent scan. The final image is exactly equivalent to a standard JPEG file of the same quality setting, and the total file size is about the same -- often a little smaller. Caution: progressive JPEG is not yet widely implemented, so many decoders will be unable to view a progressive JPEG file at all. (In particular, QuickTime's JPEG decompressor is currently unable to view progressive JPEG files.)
This switch forces To JPEG to create monochrome JPEG files from color input. Normally, To JPEG looks at all the colors in an input file and only creates a monochrome JPEG file if all colors are exact shades of grey.
Monochrome JPEG files are smaller and faster to decode than their color counterparts, because they omit the chroma information and only store luminance.
Chroma downsampling takes advantage of the fact that the eye perceives changes in intensity more sharply than it perceives changes in color. Instead of storing the chroma information (color without intensity) for every pixel, it stores it once for each 2x2 clump of pixels. This reduces file size significantly, and usually fools the eye perfectly. However, it can cause colors to "bleed" near sharp color boundaries. If you need better quality pictures than quality 95 can give you, then you should turn off chroma downsampling.
This switch controls whether To JPEG should display a warning message when given a picture that has already been compressed as a JPEG file. Repeatedly decompressing and recompressing JPEG files will degrade picture quality. However, sometimes you may have a very large JPEG file and want to recompress it as a smaller, lower-quality JPEG file; then you'll want to ignore the warning. If you do this a lot then you'll want to turn off the warning. Note that there's no point in saving at a higher quality setting than before; once the image quality is lost, you can't get it back by making the file bigger.
JPEG files can contain "comment blocks" of user-specified data which do not interfere with the image. These are often used to store text messages such as copyright information. If you type some text into this field, then it will be stored as a comment block in the JPEG file.
