To understand the
differences between a Raster or "bitmapped"
image and Vector based images, look at
either a newspaper or here online. What
you are looking at is a tight series of
Dots called pixels.
These pixels render images with smooth
transitions from one color to the next.
Vector images on the other hand are NOT
rendered by pixels, rather they are mathematically
defined vectors. Vectors are objects with
both Magnitude (size) and Direction (angles,
curvature,and so on).
The
files that store Vector images consist
of lines, with information on their location,
direction, length, color, and curves.
In the illustration below you can see
the difference between the two.