LOSSEY - A term coined by graphics programmers to refer to a technique of shrinking file sizes by giving away some precision of detail. JPEG is the most common of these. By reducing the so-called quality of a picture when you save it, you can make the file size smaller. Many pictures can take a lot of loss of fine detail before it becomes noticeable on a web page.
One note about LOSSEY compression (especially for JPEG images), is that each time you save the image, the compression is applied to the image. This results in slowly degrading the overall look of the image, although of course you do get a size reduction. Once you have saved an image with compression switched ON, it is recommended to turn JPEG compression OFF for all subsequent saves. This way you do not lose picture quality for size saving. Please note that MSPAINT does not have an option for turning JPEG compression OFF, but tools like GIMP and Photoshop offer such advanced features.