PNG or Portable Network Graphics files are bitmap images using lossless compression. They were designed to replace GIF image files but have taken a long time to become commonly used due to a lack of support by the Internet Explorer browser.
These issues have now been resolved and the format is quickly taking the place of GIF files where animation is not required.
This type of image is best used with none photographic images that use sharp lines and blocks of colour. They do not compress as well as JPEGs but neither do they lose any quality in compression.
The best use for PNG files is where an image needs to use transparency. Although an area of a GIF image can be transparent, they can only use up to 256 colours and only one level of transparency, while PNG files can use millions of colours and have varying levels of transparency. For this reason a transparent area of a GIF file will be jagged and pixelated while a PNG file can be smooth or fuzzy in order to blend in seamlessly with its background.