jpg uses "lossy" compression. So when you save at a lower quality, you’re throwing away more data that when you use a higher quality.
Chad,
To add to what Dave says, some of the data that gets potentially thrown away, is the color depth of an image. While the image dimensions may remain the same, the file will be smaller if the color depth is more shallow as per a high compression. Although the color mode might remain RGB for example, I believe it is correct to say that the number of unique colors in the image is subject to an increasing degree of reduction as the degree of compression increases. Meanwhile, resolution is irrelevant…the image dimensions in pixels are all that matters, in conjunction with the color mode. Resolution only matters when printing the image, so that it is scaled appropriately to a specified document size.
Regards,
Daryl
Do yourself a favor.
Take a photo with a good amount of detail and save as a jpeg at the lowest quality level for the smallest file size/most compression.
Save to a new file name on your desktop (my suggestion: "trashme.jpg").
Then open up the original file and zoom up on both and compare. You will see an exaggerated example of jpeg artifacting in those 8×8 pixel boxes, and will gain insight to what lossy compression does.
You may never save a jpeg again.
You don’t even have to save it. Just go to save for web and select a very low quality level jpg. You can see the artifacting at normal size in many cases, and with a slight enlargement in all cases.