Photoshop documents are usually saved under the .psd file format, if you are designing for example a banner to upload to the Internet it will not show up unless you use the standard jpeg and png formats.
Jpeg (Joint Photographic Expert Group) will show up on just about every image sharing website, when you download a file from the internet and change the size, they lose their quality when stretched using the free transform tool. You can hold down alt or shift and keep the images quality intact.
Png (Portable Network Graphics) supports lossless data compression and doesn’t lose a majority of its quality in comparison to a jpeg, for internet use a png is a better solution compared to a jpeg. Adobe Fireworks also supports this type of file format.
GIF (Graphics Interchange Format) is used to create animation and is the only format capable of producing this. Internet Forums are a popular medium for the use of GIF’s mostly for entertainment purposes.