Perceptual encoding of audio (like Vorbis, MP3, and AAC), images and video (like Theora) is one of the most popular ways to compress data, providing a balance between file sizes and what humans perceive as "verisimilar".
The current JPEG format, widely used by almost every page to show "potographic" images (and many other applications) shows poor compression rates while a given "quality ratio" is specified. Also, it performs poorly when low "quality ratios" are selected.
The JPEG2000 format is a more efficient format based on Wavelet Transforms rather than Discrete Cosine Transforms to compress data. The "quality ratios" can be selected very low and the images still show good quality, among many other features that JPEG does not have (like being a lossy compression format with support for transparency).
(As a side note, you can check which image formats your browser supports at browserspy.dk).
There are implementations of the JPEG2000 format that are Free/Libre Open Souce but not widely used. The perceived reason for this has the nature of a "chicken-and-egg" problem: no browsers support it (apart from Apple's Safari, with the use of Quicktime), and no users have still employed it, leading to little support in browsers.
There is a very long-lived bug in Mozilla's bugzilla system (almost a decade ago) that asked support for the "new" file format to be supported.
Yesterday, this long-standing feature request was closed with the "WONTFIX" tag, citing the the "chicken-and-egg" problem. This has caused many replies from both the developer and user community, and even a comment from Mark Shuttleworth stating "We'd consider a patch for the Ubuntu builds of Firefox." and Mike Hommey, one of the principal maintainers of Iceweasel for Debian.