If your graphic has too many colors, and you use the GIF format, it may appear dithered.
GIFs can contain no more than 256 colors. This makes them small and speedy because of the small amount of color information stored in the file. However, if you try to use this format for an image that needs more color than that — a color photo, for example — the image may not look good.
This is because graphics such as color photos, gradients, and other images with continuous tones, require more than 256 colors to look good. In fact, they often require thousands to millions of colors. The result, if you put them in the GIF format, is that you will get dithering. Dithering happens when colors aren't available and the pixels in the image are patterned to compensate for the lack of that color, as shown here.
So which format do you use for photos that require lots of color? The next page will explain.