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The process of creating .jpgs is synonymous with the process of throwing away information. 12-bits of data per channel from the sensor gets squeezed into 8 bits of data per channel (giving up some tonality and fine shades of color). A little bit of dynamic range gets lost too. Then Lots of visual information that the human brain cannot perceive gets thrown away, which is what’s responsible for JPG’s famously small size. If there is a lot of high-frequency detail in the image, then that gets replaced by what’s called a .jpg compression artifact (which I describe in a couple of sections). Then the compressed .jpg image file is written to the memory card, and then the raw information from which the .jpg was produced is discarded (unless you were wise enough to shoot in RAW + JPG mode).
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Gary L. Friedman (The Complete Guide to Sony's Alpha 77 II: Professional Insights for the Experienced Photographer)