holy smokes, chaosmachine, you just changed my world! (not being snarky either, I seriously never knew that in all my days of amateur photodoodling)
A very general rule I learned is that png's are best for images with large areas of the same color (screenshots, logos, text) while jpegs are best for images with lots of color variation (real-life pictures, for example).
PNGs are good at compressing gradients too, I hear.
I don't get the joke, why is this relevant?
The image was originally a blurry jpeg. Now it's a nice crisp png, and the joke is no longer relevant :)