Dots per inch relates to the detail in a raster image--the number of dots described in one inch of the image. A high-DPI image is useful when printing on a high-quality printer; and is useful if you are going to enlarge the image--the extra detail will mean that the image will enlarge (to a certain point) without becoming 'pixelated.'
Often, however, image DPI is an archenemy of PowerPoint. Photographs are typically stored with a DPI level that will support printing a high-quality version of the photograph. However, the computer does not need that much detail in order to show the photograph on screen. Therefore, the presentation is bloated with a larger file size for the image than is required.
Rules of thumb regarding DPI:
- A computer screen is 72-120 DPI, and almost always 96 DPI. It doesn't matter if it's a small screen on a PDA or a projected presentation or a gigantic display in Times Square. Your computer's display is not going to benefit from image DPI greater than 96 or 120.
- If you plan to print a raster image, save the image using a DPI that is 50% of the printer's. For example, most ink jet and laser printers used at home and work have a true resolution in the range of 300-1200 DPI. So you can safely save images at 150-600 DPI. Don't pay attention to manufacturer's marketing specifications--a 4800 DPI printer is rarely actually printing at 4800 DPI because the dots overlap.