JPG, or JPEG (Joint Photographic Experts Group) is a common file format designed to store images such as photographs while keeping a small file size. It was designed to store images with a lot of color detail, such as photographs. It uses lossy compression, which generates noticeable 8x8 "blocks" in low-detail areas; it is useless and damaging as a continuous working format, especially for sprites or pixel art.
JPEG can produce extremely small file sizes, generally lower than PNG, even when the source image has a lot of detail. Despite being a lossy format, it does support a limited amount of lossless editing, such as 90º rotations.
JPEG has been considered a very frowned upon format, and even often replaces GIF and Indexed PNG on images, due to it being such a previously popular image format. Even with its compression, GIF or indexed PNG images may be smaller than JPEG when few palette colors are used.