Pixel vs Vector

Ok, i am going to explain in a very simple way.
All image files can be categorized into two kinds, bitmap-based (pixel) and vector-based (vector) files.

Pixel
Adobe Photoshop is a pixel based photo application. basically all of the images are going to be in pixels. the more pixels per inch or dots per inch the higher the resolution, and when you enlarge a pixel image you will get a grainy image.

Vector
This is opposed to a vector based application like Adobe Illustrator, where there are vectors defining shapes and since those outlines are in essence formulas you can enlarge them to any size with out getting that pixelated loss of quality you have with pixel images. When you print a vector image it rasterizes to what ever size and resolution.