Installed by default.
Provides adjustable jpeg encoding, 32-bit PNG encoding with transparency support, and standard .NET GIF encoding (which is quite lousy, and does not support transparency). Get the PrettyGifs plugin for high-quality GIF encoding.
Jpeg quality defaults to 90, which is very good balance. You can override the setting by adding &quality=0-100
You can choose the file format with &format=png|jpg|gif