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Png is similar to gif, except it supports more colors and partial transparency.
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PNG-8 is a lot like gif, it uses a max of 256 indexed colors / greyscales and is better for text and simple graphics; you can limit the set of colours to those actually in use and a pixel can be either opaque or transparent.
PNG-24 is more like jpg, using true color and compression by merging areas of similar color etc. Simplified you could say, that it saves "Rectangle of 4x4 Pixels in Red" instead of:
1 pixel Red - 1 pixel Red - 1 pixel Red - 1 pixel Red
1 pixel Red - 1 pixel Red - 1 pixel Red - 1 pixel Red
1 pixel Red - 1 pixel Red - 1 pixel Red - 1 pixel Red
1 pixel Red - 1 pixel Red - 1 pixel Red - 1 pixel Red
The more you compress, the more similar colors become substituted by just "red" - thus the blocking and the reduction of colour-variety.
As oppposed to jpg in a PNG-24 alpha-transparency is possible, so a pixel can be "X% transparent" to the pixel beneath.
For the kind of sketches that can be made with this, it does not really make a big difference what is used though I would agree, that greyscale gif or png-8 would suffice....