Scalable Vector Graphic is a text-based graphics language that illustrates images with text, vector shapes, and embedded raster graphics. SVG files are lightweight and present top-notch graphics in print, on the Web, and on resource-constrained handheld devices. It is also used for SVG designs.
Vector graphics are constructed using mathematical formulas rather than individual colored blocks, vector file types such as EPS, AI and PDF are excellent for creating graphics that frequently require resizing.
Essentially what this all means is that you can resize your images without ever losing the quality of the image.
Raster graphics, on the other hand, will lose their quality of the image if you try to resize it. They are comprised of lots of pixels or little tiny building blocks which can appear grainy or blurry if you expand it beyond the original scaled size.
Photos are a good example of a raster graphic. JPG, PNG, GIF, TIF are all raster image file types.