Optimization tool will allow you to balance the display quality of an image with its file size. Since large image files can make a web page very slow to load, achieving the smallest file size possible without compromising picture quality too much is critical when developing for the web. There are various methods for displaying an image using optimistaion:

1- Linked thumbnail
This technique takes the original image and resizes it into a smaller second version, about avatar size. The smaller image is also heavily optimised to remove as much information as possible, while allowing it to remain recognisable. This thumbnail can be hyperlinked to the original picture, of much larger size and quality. The hyperlink can open the original picture in another page, or as a popup, allowing the viewer to choose to see an optimized version initially with the option of clicking it to reveal a larger version if they want.

2- Interlacing
The interlacing feature in a GIF file makes it appear to load in the webpage faster. The image appears in the browser quickly, although its quality may be poor. As more data gets transferred, the image quality improves. It's important to note that interlaced GIF files will usually be a bit larger than non-interlaced ones, so use interlacing only when its more important to see the image quickly than see it later, but at full quality


3- Progressive JPEG's
Any JPEG file can be saved as a Progressive JPEG. This is very similar to the interlaced GIF. As with GIF, this presents a low-quality image to your visitor when the page first loads, and over several passes improves the quality of it. Some optimization editing tools allow you to specify the number of passes before the image downloads completely.

4- Flash zoom
Flash can be used to display a very large image, both physically and byte wise. It does this by breaking the original image up into several small tiles that can be joined together seamlessly and 'streamed' to the viewer acoording to which part of the image is being looked at.

5- Table segments.
Some optimisation tools will allow you to manually divide your image into several smaller blocks, like tiles. These are then used within a table of corresponding number and division of cells. Each cell is boarderless and have no spacing or padding. When the table is loaded, each cell will load its own (small) section of the image which is comparatively quick. The effect is to stage the image loading process by showing the segments one-by-one as the table loads. Obviously, each section of the image must be correctly matched in each cell.

Some image optimization tools will let you optimize your graphics by giving you preview and compare the results (both kb size and image quality) of different file compression formats and settings. This is a useful option.

Also see How to I prepare images for use on a xoops website?
and Should I use PNG, GIF, JPG, or other image types?