This limits the amount of compression that can be performed on the image. The only way to reduce the image size further is to reduce the size of the palette in the image. Because of the compression method used, the GIF format is most useful for storing images that have large areas of exactly the same color. Scanned photos tend to have poor compression because subtle variations in color in the original image are represented by different entries in the color palette. Use GIF for crisp, sharp images and pictures that have large blocks of color.
All graphical browsers can display GIFs inline.
JPEG optimizes images for the human eye - discarding information beyond what the human eye can see. Usually, the degradation in the image due to discarding this data is not perceptible to the human eye. At higher compressions JPEG images tend to become fuzzier rather than losing color information as the GIF images can. One advantage of JPEG compression is that you can select the quality when compressing the image. The lower the quality, the smaller the image file size but the more different it will appear from the original.