When working as a web or graphic designer, it is very important to understand the difference between "vector" and "rastor". These are two words used to describe the basic structure of a file or program. Take the Adobe Creative Suite for example, some of the programs included within the Suite are vector based, while others are rastor based. In particular, you should note that Photoshop is a rastor based program, while Illustrator and InDesign are both vector based programs.
Now I still haven’t answered the question of what the difference between the two is though. Well here is your explanation. The word raster refers to pixels (or points if you will), while vector refers to lines. When making an image, you can base it off of two things; individual points in the image that are colored in whatever way you want that come together to make an image, or a bunch of lines that define spaces and colors, thus creating an image. Still not getting it? That’s okay… Let me try by talking about what you’d want to use for different types of projects.
Photo Editing: Photos are loaded with tons of information all the way down to the pixel level, thus making them rastor based. If you were to take a photo and try to expand it ten times larger than it already is, it is going to get blurry. That’s because for every individual pixel of information, you are trying to turn that into 100 pixels, giving it seemingly less detail. But without simplifying that image, there is no way to really replicate it using just lines is there? That’s why photos are rastor based, but are also limited in how big you can make them.
Logo Design: Now say you are working on a logo, and you need it to work in a lot of different places (on a website, on letterhead, on a business card, or on a giant billboard). That means you need an image that can shift in size but not lose it’s definition. To do this, you want to use a vector based software. So if your logo has a "+" in it, you can make that as big as you need without distorting it, because it is defined using lines, and no matter how you alter it, it will always be two lines. Now don’t limit yourself to thinking of lines as having to be straight. Vector based software thrives off using curves. This is why vector based software is so much more ideal for making things with writing in them. Letters just don’t do well under rastor based software because you lose the specific curve of a font to aliased pixels.
And really, that’s the difference between "vector" and "rastor". You want to use rastor software when working with photos. But for pretty much anything else you are going to want to stick to vector software so that your copywriting doesn’t lose quality, and so that you can change the image size without losing quality.
Any questions? Ask away!