I know for sure speaking digital photography which is most commonly used today, that pix-elation starts when the picture is taken. A pixel is the smallest amount of an image that can be individually processed in a video display system, depending on how the picture is saved (which is usually automatically set on your camera) The more pixels per square inch of the photo, the better the images, on the other hand this takes up more memory/space. If the picture saved takes up a lot of space, it is more than likely high resolution or simply a large image. All pictures are saved in some form of bitmap (each pixel corresponds to one or more bits in memory, the number of bits per pixel determining the number of available colors) EX: BMP, JPEG, JPG are the most common method of auto image saving. JPEGs' tend to take up less space, no matter what size the actual image is. If the images simply saves as BMP it can be played with easily in any program to change, crop or modify as needed. After modifying you can choose to save the picture/image as the type of your choice. I'll get back to you on the watermarked thing, A watermarked picture or a watermark is usually some form of a copyright and of course a special image/word that shows up in the backgroud of an image.