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Well no your site wont soley be based on graphics photoshop will spit out a html file with tables, css, and so on....It will provide all the spacer images plus it will optimize the images for loading...and loading many little images is better then loading one big image...
I personally found the output code garbage though...
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Humn, I did not know that we can do that. I always thought we need to manually convert them. Which is why these design company provide their instant html conversion service.
Thanks for the info!