Why PNG shrinks less than JPEG
PNG is a "lossless" format — no pixel is ever discarded, unlike JPEG which sacrifices some data by design. That means a pure PNG optimization pass usually only saves 10–40%. For a bigger drop, this tool uses a different lever: reducing how many colors the image uses.
How color reduction works
Most web images (product shots and icons especially) don't need millions of colors. This tool reduces the image down to however many colors you pick (say, 128 or 64) and uses dithering to hide most of the resulting quality loss — the same technique tools like TinyPNG use.
When it's not a great fit
For images with subtle gradients or a very wide color range (professional photography, for instance), color reduction can become visible. In those cases, pick a higher number (closer to 256) or check the result before downloading.