NPG

Vector / Bitmap
Computers display graphics in either vector or bitmap format.

Vector
graphics describe images by using lines and curves, called vectors, that also include color and position properties. This image is described by points through which the lines pass, creating the image’s outline. The color is determined by the color of the outline and the color of the area enclosed by the outline.
When you edit a vector graphic, you modify the properties of the lines and curves that describe its shape without losing any quality in appearance.
(examples: .ai, .eps, .pdf )

Learn more from Wikipedia.org

Bitmap graphics describe images by using colored pixels arranged in a grid. The image is described by the specific location and color value of each pixel in the same manner as a mosaic.
When you edit a bitmap graphic, you modify pixels, making the edges of the image appear ragged or blurry as pixels are redistributed within the grid causing a degraded quality.
(examples: .jpg, .tif, .gif, .png)

Learn more from Wikipedia.org
Comparison of usable vector art and
unusable low resolution bitmap art.

Comparison of an enlarged portion of a low and high resolution image.