Digital information is stored using a series of ones and zeros. Computers are digital machines because they can only read information as on or off - 1 or 0. This method of computation, also known as the binary system, may seem rather simplistic, but can be used to represent incredible amounts of data. Digital information can also be copied, edited, and moved without losing any quality. Because of the benefits digital information offers, it has become the most common way of storing and reading data. (source: techterms.com)

The number of pixels per square inch on a computer-generated display; the greater the resolution, the better the picture.

This term can describe how many pixels a monitor (or digital television) can display or how fine a printer can print.
1. Monitors. A small monitor may have a resolution or 640 x 480, which means there are 640 pixels horizontally across the screen and 480 pixels vertically. Some other common monitor resolutions are 800 x 600, 1,024 x 768, and 1,280 x 1,024. The higher the resolution, the more that can be displayed on the screen.
2. Printers. Printer resolution measures how fine a printer can print. This measurement is known as dots per inch or "dpi." The greater the dpi, the better the image clarity. Scanner resolution is also measured in dpi (source: techterms.com)

The smallest element of an image that can be individually processed in a video display system. The greater the number of pixels per inch the greater the resolution.

DPI is an acronymn for Dots Per Inch. DPI is a measure of printing resolution, in particular, the number of individual dots of ink a printer or toner can produce within a linear one-inch (2.54 cm) space. The term DPI is often adopted to describe graphical resolution (on your computer), although the acronym is technically inaccurate since resolution on a computer is measured in square pixels, not dots. Sometimes you will see graphical resolution (on a monitor, HDTV, or screen) described as PPI (Pixels Per Inch), which is more accurate, but not as widely used. The significance of the dpi measure in scanning your image relates (in general) to the quality of final printed version. You need a higher dpi (or ppi) in order for a printer to match the quality of an image on your screen. To give you a numerical example, 72dpi is all that is needed to create a clear image for the web. However, to print a quality image, your image dpi must be at least twice that, ideally around 300dpi. This is because a monitor can display many more colors than a printer can.

A megapixel is one million pixels. It is commonly used to describe the resolution of digital cameras. For example, a 7.2 megapixel camera is capable of capturing roughly 7,200,000 pixels. Megapixels are helpful in marketing digital cameras, because it is easier to say, "6.3 megapixels" than "6,291,456 pixels." It is also a little easier to remember. The higher the megapixel number, the more detail the camera can capture. Therefore, the megapixel count is a significant specification to look for when buying a digital camera. (source: techterms.com).