A JPG has no transparent pixels
JPEG stores colour only: no alpha channel, no see-through areas. MDN's image guide says JPEG has no alpha. A logo that looks round on a white web page is really a square with white corners, and that is what ends up inside the icon.
- Rounded corners. The corner slider cuts transparent corners into the icon, up to a full circle. In our test of a photo with the corners set to a circle, the corner pixels came out fully transparent and the centre fully solid, in every size inside the file.
- Fit with a background. With Fit, a picture that is not square leaves bands. They are transparent unless you choose a background colour, so choose one if the bands should be solid.
- A real transparent logo. If you have a PNG with a see-through background, PNG to ICO keeps that transparency. You cannot get it back from the JPG.
Photos at tiny sizes
At 16 pixels an icon is 256 pixels in total. A photo of a landscape turns into a smudge, and even a face needs a close crop. Use Fill and choose a picture in which the subject already fills most of the frame. Look at the enlarged 16 pixel preview before you decide the sizes are good enough.
For a website, a simple logo beats a photo as a favicon. For a Windows shortcut or a folder, photos work better, because Windows shows icons at 48 pixels and up in most views. That is why the Windows preset includes 48 and 256.
JPEG blocks get bigger when you enlarge
JPEG compresses a picture in small blocks and throws away detail. Shrinking a picture hides those blocks, but enlarging it shows them. A 300 pixel JPG turned into a 256 pixel entry is fine. A 100 pixel JPG turned into a 256 pixel entry will look soft and blocky, and the page names every size that is enlarged.
Start from the best copy you have. A JPG that was saved at a low quality, or one that was saved over and over, will not look better as an icon. The tool draws each size from the whole picture with a Lanczos filter, which is sharper than the simple resizing a browser does, but it cannot invent detail.
Using the file
For a website, save the result as favicon.ico in the root folder of the site and add the link tag the page shows. For a Windows shortcut, any program that accepts an .ico will take it.
Photos carry metadata such as the camera and the place the picture was taken. None of it goes into an ICO file, which holds only pictures.