Compression, and 'Compression artifacts', refers to visual distortion which occurs in an image when information is lost. The JPEG file format literally compresses an image - makes it smaller - to reduce the file size during saves. The particular compression method it uses is a lossy format, which means that it loses some information to shrink the actual number of bytes used in the file. When too much information is lost it can have a visible impact on the image. This can also happen during the image editing stage. These days, improved camera technology and lots of available storage have helped. Most of the compression that we see now is a result of excessive image editing. Pushing certain filters or processing techniques will cause information to become lost and introduce compression damage into the file.
Compression typically results in a few different kinds of visual distortion, which will typically be called 'artifacting', 'contouring', or 'posterizing':
Typical small sensor compression.
Blue skies are prone to detail degradation. In this case, over-saturation and boosted contrast in an 8 bit jpg file have made the problem worse.
Underexposed, low ISO RAW image. Compression was introduced after too much exposure adjustment and sharpening during RAW editing.
RAW conversion with boosted contrast, edited curves and pushed contrast. Visible circular banding appears at 100% in the top corner of the sky.
Heavy editing at the RAW stage to bring out detail in the shadow/highlight areas has introduced ugly halos on the outlines. Image is also over-sharpened.
Underexposed RAW image with overly-aggressive selective exposure editing.
Visible artifacting in the shadow areas.
Please read this article for more examples and information about compression.
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