Raster Images

Raster images are based upon a grid of pixels. These pixels are small squares or dots that convey the color and tonal information for your image. Depending on your dpi or dots per inch, you will need to factor in the amount of pixels needed to create a high resolution image for the size required in your document. If you try to enlarge a raster image without changing the resolution, the image will appear blurry due to the amount of pixels per inch not having increased. 

Vector images

Vector images are made up of paths, that are formed from a mathematical formula (vector) that determines how the shapes are formed and with which colors fill in the shapes. Because the paths are formed by a formula, they can be resized and still retain their appearance. Vector images are most commonly used for logo designs, solid color illustrations, and schematic designs. It is important to note that vector images cannot feature color gradients, shadows, and shading that are common in raster images.