Image data is most often used to represent graphic or pictorial data. The term image inherently reflects a graphic representation, and in the GIS world, differs significantly from raster data. Most often, image data is used to store remotely sensed imagery, e.g. satellite scenes or orthophotos, or ancillary graphics such as photographs, scanned plan documents, etc. Image data is typically used in GIS systems as background display data (if the image has been rectified and georeferenced); or as a graphic attribute. Remote sensing software makes use of image data for image classification and processing. Typically, this data must be converted into a raster format (and perhaps vector) to be used analytically with the GIS.
Image data is typically stored in a variety of de facto industry standard proprietary formats. These often reflect the most popular image processing systems. Other graphic image formats, such as TIFF, GIF, PCX, etc., are used to store ancillary image data. Most GIS software will read such formats and allow you to display this data.