From Sue Chastain,
Your Guide to Graphics Software.
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Definition: PPI stands for pixels per inch. PPI is a measurement of image resolution that defines the size an image will print. An image that is 1600 by 1200 pixels at 300ppi will print at a size of 5.3 by 4 inches. Or it could be printed at 180 ppi for a printed size of 8.89 by 6.67 inches. The higher the ppi value, the better quality print you will get--but only up to a point. 300ppi is generally considered the point of diminishing returns when it comes to ink jet printing of digital photos.

The term DPI is often used interchangably with PPI, causing a lot of confusion, however, DPI refers to the resolution of a printing device.

Graphics Glossary