Why SVG format

A laser cutting machine is basically capable of doing two things:
1) Engraving
2) Cutting

For engraving it needs a picture. This can be a file of format JPG or PNG or maybe also BMP, TIFF or others. These files cotnain a matrix of pixels where often one pixel is represented by 3 color values to render the single pixel color.

For cutting it needs paths to cut along. A vector file contains such paths. Vector files are also scalable while they keep very accurate. Such vector files do not contain pixel information, it is a set of instructions to draw. The tool which visualized a vector graphics file executes these instructions, which results in pixels being drawn on your monitor, or printed on paper. Or they can be executed by a CNC machine or a laser cutting machine.

This for cutting a vector file is needed.



Since we are on the topic of file formats:
There are basically two types of picture files, they are either accurate or inaccurate. This is easily seen if you draw a line with the width of a single pixel, save it as PNG and save it as JPG. The PNG picture will show a 1 pixel width line. The JPG picture is very likely showing a line of 2 or 3 pixels width. It is sort of blurry when you zoom in.

The difference is lossless or lossy compression or no compression at all (BMP), which is used by different graphic file format.
PNG is lossless compression. Meaning you do not loose info, the one pixel line remains as is.
Thus PNG is perfect for exact drawings, such as a floorplan of a building, or electrical schematics. They should not become blurry.

JPG is lossy compression. This is perfect for photos, the file size is much smaller due to higher compression and the human eye cannot tell the difference in a photo. As mentioned before you do see this effect when looking at a single dot line.

Hope this explanation helps  a bit in understanding the usages of these different graphic file formats.