Storage is one of these compromises; digital images take a great deal of space for storage. They need to be managed in a way that ensures enough images can be stored before they need to be downloaded from the camera.
Cameras use different levels of compression to downsize the images for storing them in memory. JPEG is the most widely used standard, it removes information that can't be seen by the human eye anyway. The higher the level of compression, the more information is deleted.
At the higher compression setting, blocks start to appear in the images. This begins to degrade the image quality, making the resulting file size extremely small. If quality is the most important consideration, avoid JPEG compression.
The mid- to high-end digital cameras offer different forms of compression, which don't delete any information, by using mathematical algorithms. They compress the file and save it either in TIFF format or as RAW files, which contain only the information the sensor captured with no in camera processing.
Larger file sizes are the result of this lossless file compression format. However, the higher image quality and post processing flexibility makes up for the loss in image storage space.
Another compromise made in digital cameras is the in-camera processing; these create predefined results. Some cameras have sharpening filters which restore the contrast that is lost in edge details when the image goes through the various optical filters.
This process of sharpening in the camera reduces the ability to sharpen the image once it has been downloaded to the computer. Oversharpening can create unnatural and harsh edges and may even cause shifts in color.