JPEG Tutorial
http://www.imaging.org/resources/jpegtutorial/index.cfm

Society for Imaging Science and Technology, The

Abstract:

This page presents a brief description of how JPEG compresses images. JPEG, unlike other formats like PPM, PGM, and GIF, is a lossy compression technique; this means visual information is lost permanently. The key to making JPEG work is choosing what data to throw away.