What’s great about this method of representing an image is that the image stays the same, even if the percent is changed. Also, because it is saved in a PPM format, it is small, compact, and obviously saves on disk space. With virtually any image you can see that the colors are all contained in the medium grey and full red areas. This is because it is a very monotone image. 8 bit color will do this as well but since it is very monotone, it would require a lot of colors to display properly. Although the image in the GIF format using 33 color looks proper, if you look closely you can see that some areas seem quite bright (one area is even a bit neon blue). This is because the GIF format, unfortunately, does not directly specify colors. Instead, each pixel is represented by a single value, ranging from 0 to 255. A value of 209, for instance, is the same shade of green as that found at the top right image. The GIF color lookup table interprets this as a shade of green. In the GIF format, this is referred to as the green index. If you set your GIF images to be a different color (such as a light intensly green, lime green, an aqua-green, etc.) you will see a more accurate representation of what the color is.
A JPEG (or JPG) image is compressed using a different lossy compression scheme than the GIF format and is therefore not as accurate. As the name indicates, images are compressed using a lossy compression scheme which means that, unlike a GIF file, the JPEG file cannot be subtly corrected to very accurately represent a true color image. You get precise 256 shades of color but not equivalent intensities. Still, if you are archiving/displaying a human figure, the loss of separations between the major body parts is not noticeable. As with the GIF format, you can see that the colors in the 4th row of the 3×3 picture are very bright. This is a result of the JPEG compression algorithm. One interesting thing is that high intensity color is indeed represented in a very bright manner. d2c66b5586