Not quite
. What I am saying is that if you save a file that uses a lossy compression file format, like a jpeg, you will lose quality compared to the original. Basically the loss of quality actually takes place at the time at which you save the file because that's when the lossy algorithm is applied.
So for example, if you are editing a photograph, it's always better to work with a lossless format. So I might decide to do all my edits in say lossless TIFF, so each time I edit the actual picture quality will be the same as the last. As you pointed out earlier, these files get very big. So I might keep the first one, in case I want to start all over again. I will definitely keep the last one ... that becomes the 'master' copy at maximum quality.
But TIFFs can be huge, so chances are I'll want to work with a jpeg if say, I want to send a high quality copy to a friend. so I will save that TIFF (create a new file) as a high quality jpeg. However, if I want to do a low-res and/or low quality copy to put on the web, I won't take it from the jpeg, I'll do a different copy from the TIFF - because that will have better quality than if I'd taken it from the first jpeg. Not a huge difference (because the first jpeg was high quality) ... but that's where quality starts to go once we keep taking jpegs from jpegs.
Doing a Windows or system file copy of a jpeg (or any other file) is fine ... that's just a byte for byte copy. You can copy those around to your heart's content and you won't lose quality.
So text files aren't normally compressed, and even when we use zip compression it uses a lossless format so that when we unzip we get exactly the same data back out.
In fact most data we work with on PCs is lossless - some will be compressed, like zip archives, but most isn't. Raw audio or pictures or video takes up a huge amount of space - so we use file formats with some form of compression in order to make them smaller ... and that's when you have to be careful if you do a lot of editing.
This doesn't mean jpegs are bad - far from it. Jpegs and other lossy formats all have a time and a place ... it's just being aware of the pitfalls
Look at mp3s, which are also lossy ... everyone has 'em, but if you were producing music you wouldn't work with those as master copies.
Here's a better link re pics ... http://en.wikipedia.org/wiki/Lossy_compression