Intra Picture is encoded as a single image using only information from that picture. I-Picture uses only transform coding, so it provides low compression rate. In the most cases it uses cca two bits per coded pixel. Image blocks have very big spatial redundancy, so MPEG tries to cut this huge amount of data. DCT separates the signal into independent frequency bands making data quantized.
Quantization is the only lossy part of the whole compression process other than subsampling.
A P-Picture is nonintra picture. Nonintra picture uses information which are displaced in time. P-Picture is coded with reference to a previous image that could be either I or P Picture. Example picture shows that the picture to be encoded is similar to the reference picture except it is a little bit shifted. Most of the changes between reference picture and picture to be encoded can be represented as translation of small picture regions.