On some of the more advanced consumer models there are a lot of adjustments and settings that can affect image quality, and understanding them is critical if you want to get the most out of your camera. Whatever they are called in your camera, they all work basically the same. What these settings represent is the compression level of the images when they are saved in your camera as JPEGs. This takes up less space on your memory cards and so you can take more pictures with a smaller card. The problem is that there is no free lunch.
Artifacts are unwanted pixels caused by the compression process.
In some cases these may be invisible, but in others they can be so pronounced that they ruin what would otherwise be a good image. Let's take a look at some images to see what this compression can do to an image. The following three example images were treated identically with the exception of what setting were used in the camera when they were captured. This is actually a pretty low level of compression. You can see a bit of noise around the needles against the sky, but it is actually not too bad.