Non-interlaced images download one line at a time, starting at the top. Interlaced images are displayed incrementally, appearing fuzzy at first and gradually sharpening. If you have elected to have a transparent selection in the image you will have to choose the 89a Version. Version 87a is only available if the image doesn't contain a transparency. The Quality tab allows you to set the compression value for the image.
Higher compression reduces the file size but also decreases image quality.
Watch the preview box while adjusting the compression. When you find that fine line between a clear image and the point where the image starts to deteriorate, you've found the best compression value. The format determines how the image will appear as it's being loaded. This is similar to the GIF Format tab. JPGs have two formats, Standard and Progressive.