PNG — Portable Network Graphics
PNG is a format » invented specifically for the web in response to a licensing scheme introduced which meant the creators of any software that supported the GIF format had to pay five thousand dollars for the privilege (this tax has since expired). While they were at it however, the creators of PNG (“ping”) went ahead and created a format superior to GIF in almost every way.
One version of the format, PNG-8, is similar to the GIF format. It can be saved with a maximum of 256 colours and supports 1-bit transparency. Filesizes when saved in a capable image editor like FireWorks will be noticeably smaller than the GIF counterpart, as PNGs save their colour data more efficiently.
PNG-24 is another flavour of PNG, with 24-bit colour support, allowing ranges of colour akin to a high colour JPG. PNG-24 is in no way a replacement format for JPG, however, because it is a loss-less compression format. This means that filesizes can be rather big against a comparable JPG.
PNG’s main draw are alpha-channels. Instead of the rudimentary transparency options in other formats (where a pixel is either transparent or opaque), an alpha channel can specify the opacity of any pixel from 0–255, where 0 is fully transparent and 255 is fully opaque. This allows you to create a graphic that can be placed on top of any background colour and will retain a translucent effect, with the background showing through the pixels that are not opaque.
The problem with this — and there had to be one — is that IE6 doesn’t support alpha-channels. Once a new version of IE comes out with this vital support, you should see the effect springing up on trendy designers’ sites across the web.