File Formats

A file format is a particular way that information is encoded for storage in a computer file.
Since a disk drive, or indeed any computer storage, can store only bits, the computer must have some way of converting information to 0s and 1s and vice-versa. There are different kinds of formats for different kinds of information. Within any format type, e.g., word processor documents, there will typically be several different formats. Sometimes these formats compete with each other.
File formats are divided into proprietary and open formats.
Generality
Some file formats are designed for very particular sorts of data: PNG files, for example, store bitmapped images using lossless data compression. Other file formats, however, are designed for storage of several different types of data: the Ogg format can act as a container for many different types of multimedia, including any combination of audio and/or video, with or without text (such as subtitles), and metadata. A text file can contain any stream of characters, encoded for example as ASCII or Unicode, including possible control characters. Some file formats, such as HTML, Scalable Vector Graphics and the source code of computer software, are also text files with defined syntaxes that allow them to be used for specific purposes.
Identifying the type of a file
A method is required to determine the format of a particular file within the filesystem—an example of metadata. Different operating systems have traditionally taken different approaches to this problem, with each approach having its own advantages and disadvantages.
Of course, most modern operating systems, and individual applications, need to use all of these approaches to process various files, at least to be able to read 'foreign' file formats, if not work with them completely.

References:

Wikipedia
The Computer School