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Photoshop CS3 is the premiere image-editing program available today. But it offers far more than mere digital tweaks to your photos. It’s also the tool of choice for many other creative endeavors. And many of those other projects involve adding text to artwork. Even digital photographers benefit from Photoshop’s type handling capabilities—what better way to add a title, copyright information, or even a watermark to a photo than right in Photoshop? (While Photoshop is great for adding a line of type or perhaps a few paragraphs of text, perhaps to a flyer or brochure or poster, remember that it’s not the program of choice for such complex projects as books or magazine articles. Such work requires a page layout program like Adobe InDesign.)
Until version 5's type layers, there really wasn't "type" in Photoshop. Rather, we created masks (selections) in the shape of characters and filled with color. You couldn't edit the text later, and it printed as pixels. Photoshop 6 added vector type, which improved output to PostScript devices, such as laser printers and imagesetters. Photoshop 7 adds a few more features. (Despite these important improvements in Photoshop’s text handling capabilities, if you need to add lots of text or very small type to a project, consider using Adobe InDesign Illustrator.)
Basic Type-Related Concepts
There are numerous advantages to vector type. For example, when printed with a PostScript output device, the edges remain crisp and clean, without the so-called jaggies—the visible stair-step edges of pixels along a curve. Vector artwork can be scaled in an illustration program or by a PostScript printer and still retain those high-quality edges. Because it consists of mathematically defined paths, it can also be manipulated in ways impossible with raster art. Figure 1 compares enlarged vector and raster characters and shows how the vector paths of an individual character might be edited.

Figure 1 When scaled, vector text retains crisp edges, while rasterized text loses definition.
The primary advantage of raster art is its capability of reproducing fine transitions and gradations in color, such as those found in photographs. Because type is usually a single color, that capability is not of particular value. However, Photoshop’s vector type can be rasterized when necessary.
The difference between vector and rasterized type is primarily of importance during the creation process and when preparing artwork for placement in a page layout program. In most other circumstances, the type is automatically rasterized. Remember that Web artwork prepared in Photoshop is raster (including any text incorporated into the images). Likewise, inkjet printers don’t take advantage of vector type. (Only PostScript printers can actually work with vectors as such.) When outputting to an inkjet printer, saving images for the Web, or using a non-PostScript file format, type is automatically rasterized. This doesn't mean, however, that you want to rasterize the type manually. Instead, leave it as vector in your original document so that it can be edited, and let the printer's software rasterize upon output.
In Photoshop, the PostScript file formats (those that support vectors) are limited to Photoshop (.psd), Encapsulated PostScript (.eps), Portable Document Format (.pdf), and Desktop Color Separations (.dcs). The enhanced TIFF file format can also support vector type layers, but full implementation of the format’s advanced features outside the Adobe Creative Suite is virtually nonexistent.
NOTE
EPS, PDF, and DCS support vector type when saving from Photoshop. However, re-opening any of these image formats in Photoshop results in rasterization. After you save a file with vector text in one of these formats, don’t reopen it in Photoshop. It’s a good idea to keep the original in Photoshop’s own .psd format.
When saving in a format that can maintain vector artwork or type, you’ll need to ensure that the Include Vector Data option is selected. You'll see check boxes in the various PostScript file format options dialog boxes (which appear after Photoshop’s Save As dialog box). While both the EPS and the DCS option dialog boxes warn about reopening files in Photoshop, the PDF dialog box does not.
Another advantage of using vector type in Photoshop is type warping. Clicking the Warp Type button in the Options Bar allows you to choose from a variety of preset (yet customizable) type distortion options. As you can see in Figure 2, Photoshop’s type warping capabilities allow you to manipulate text in a variety of ways.
Figure 2 These are just six of the many ways you can warp type in Photoshop.
Type warping in Photoshop should not be confused with type-on-a-path
Typography

Typography is the art and techniques of arranging type, type design, and modifying type glyphs. Type glyphs are created and modified using a variety of illustration techniques. The arrangement of type involves the selection of typefaces, point size, line length, leading (line spacing), letter-spacing (tracking) and kerning.
Typography is performed by typesetters, compositors, typographers, graphic artists, art directors, and clerical workers. Until the Digital Age, typography was a specialized occupation. Digitization opened up typography to new generations of visual designers and lay users.
History
For the origins and evolution of typography, see the main articles History of western typography, History of typography in East Asia, and Moveable type.
Look up typography in Wiktionary, the free dictionary.
Etymology: Typography (from the Greek words τύπος type = "to strike" "That by which something is symbolized or figured …" and γραφία graphia = to write).
Typography traces its origins to the first punches and dies used to make seals and currency in ancient times. The first known movable type printing artifact is probably the Phaistos Disc, though its real purpose remains disputed. The item dates between 1850 BC and 1600 BC, back to Minoan age and is now on display at the archaeological museum of Herakleion in Crete, Greece.
Typography with moveable type was separately invented in 11th-century China, and modular moveable metal type began in 13th-century China and Korea, was developed again in mid-15th century Europe with the development of specialised techniques for casting and combining cheap copies of letterpunches in the vast quantities required to print multiple copies of texts.