Vector images use mathematical equations to define each component of an image. This allows vector images to retain their high-quality at any size. Programs like Adobe Illustrator or Corel Draw use vector graphics. Vector images should be used for all text and logos if possible. They result in the clearest image and can be re-sized without losing resolution.
A raster image is composed of a collection of tiny dots called pixels. When these pixels are small, and placed close together, they fool the eye into forming a single image. Raster images work great when subtle gradations of colour are necessary. Because they contain a fixed number of pixels, a major disadvantage of raster images is that their quality suffers when they are enlarged or otherwise transformed.