A file format refers to the particular structure that a document (also called a "data file") is stored in, whether it contains graphics, text, a spreadsheet, etc. For instance, in a word processing document, the file format would include the codes that represent each character; the codes for creating the text styles, such as italic or bold; and information such as the type of application the document was created in.
Each program has its own way of storing this information-its own file format. The MacWrite format is different from the Word format which is different from the WordPerfect format. To use a document created by another application, the program has to convert the foreign format into its own "native" format.
In addition to native file formats for every word processor, there are generic text file formats, such as ASCII (text-only) or RTF (rich text format). There are many different file formats for graphics, as well, such as TIFF, PICT, PCX, MacPaint, WMF, DRW, EPS. Different programs can use different formats, and many programs can open and use more than one.