But the basic idea is that JPG compresses mostly the color information and leaves the luminance information. This is based on the fact that the human eye cannot distinguish subtle differences in color as it can in luminance. So the algorithm separates these two pieces of information, divides the image into 8x8 pixel blocks and does its thing. JPG is best at compressing gradations of color. That is why blurring the image helps the compression.
Adjacent pixels come closer together in hue, thus creating a better gradation.
The light area and dark area in the image to the left are independantly very good for compression. Where they meet becomes the problem. JPG is worse at sharp contrasts, and the effects of this can be seen at medium to low quality levels. The sharp outline of his nose becomes noticably 'blocky' at quality levels below 40. So, I played it safe and set the quality at 50.