The GIF image format, "Graphics Interchange Format", is an old image format designed in the era of graphics cards handling 16-256 colors. It utilizes very simplistic compression, and has very limited support for transparency.
The modern alternative to the GIF format is the PNG format, which while also being (near-)lossless, handles true color display and a separate "alpha" (transparency) channel that allows for smooth edges (anti-aliasing) regardless of background color.
These are examples of a GIF image versus a PNG image, with different background colors:
- If you are viewing this with Internet Explorer prior to version 7, you will see a dark gray box around the PNG icon with the white background. This is because prior to version 7, Internet Explorer does not fully support PNG transparency; it will shade toward the "background color" element of the image.