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It works like google maps. The high resolution image is sampled into several layers of lower resolution. You can call it levels.

Every level is split into quadrants.

So when someone zooms in, it will fetch the quadrants that is visible to the browser viewport. By doing this way, the browser doesnt have to load the rest of the image and thus save alot of bandwidth!

Exactly. Part of the same logic when you stream video: not 100% of the frames are loaded at once, but they come in eventually.

https://max1.prodibicdn.com/9ydmr8zdmerork/00/9/0_0.jpg

https://max1.prodibicdn.com/9ydmr8zdmerork/00/10/0_0.jpg

https://max1.prodibicdn.com/9ydmr8zdmerork/00/11/0_0.jpg

https://max1.prodibicdn.com/9ydmr8zdmerork/00/12/0_0.jpg

https://max1.prodibicdn.com/9ydmr8zdmerork/00/13/0_0.jpg

https://max1.prodibicdn.com/9ydmr8zdmerork/00/14/0_0.jpg

https://max1.prodibicdn.com/9ydmr8zdmerork/00/15/0_0.jpg

should give you an idea of what's going on.

By lying about what actually gets served and by reinventing on-demand requesting of image tiles. This is ancient tech.

Ancient in a convenient, all-included package, yes. It's like serving videos yourself or embedding youtube/wistia/vimeo... The quick and performant way has value for some.