DPI and PPI Explained

PPI
This is the number of pixels per inch in your image. This will affect the print size of your photo and will affect the quality of the output. The way that it will affect the quality of the output is that if there are too few pixels per inch, then the pixels will be very large and you will get a very pixelated image (jagged edges, you will actually see individual pixels, not good). You'll hear various different numbers thrown around as to what an acceptable PPI for a print-out is. A lot of this will depend on the size of the print. This is because you look at large prints from a further distance than a small print, so you can get away with a lower PPI and still have the image look fine.

Anyway, all that PPI does is affect the print size of the image. There are 2 ways that you can change the print size, by resampling or by not resampling. Not resampling is what you normally want to do, this will only change the size of the print out. Using resampling will actually change the number of pixels (and thus the file size) in order to match the print size. So for instance, if you don't resample, changing the PPI setting will increase or decrease the print size (it will increase if you drop the PPI, it will decrease if you increase the PPI). With resampling, if you change the PPI, you will loose pixels (if you set the PPI to a lower value) or you will have pixels created (if you increase the PPI). Creating pixels is a bad idea, they get generated by the computer and the results aren't usually that good. Throwing away pixels is fine as long as you won't need the bigger size later (that's why it's usually a good idea to save the original large file).

DPI
DPI only refers to the printer. Every pixel output is made up of different coloured inks (usually 4 or 6 colours, depending on your printer). Because of the small number of colours, the printer needs to be able to mix these inks to make up all the colours of the image. So each pixel of the image is created by a series of tiny dots (you could think of them as sub-pixels). Generally, the higher the DPI, the better the tonality of the image, colours should look better and blends between colours should be smoother. You'll also use more ink and the print job will be slower. You might want to try setting your printer to a lower DPI to save ink and speed up the job, see if you notice any difference in quality. The lowest setting where you don't see any loss in quality should be the best one to use.

So a 1200 dpi printer uses 1200 dots of ink in every inch to make up the colours. If you were printing a 300 PPI image, then every pixel would be made up of 16 smaller ink dots (1200 DPI x 1200 DPI / 300 PPI x 300 PPI). A lower DPI would have fewer ink dots making up each pixel, which would make the colour look worse. A higher DPI would have more ink dots for each pixel and should give more accurate colour (especially under close examination).