Why a PDF cannot hold WebP
A PDF understands a short list of ways to store a picture: deflate (the method PNG uses), JPEG, JPEG 2000 and a few for black and white scans. WebP, the format that many websites and apps now use for images, is not on the list. A converter therefore has to open the WebP, get the pixels, and store them one of the ways a PDF knows. There is no way to put the WebP file into the PDF as it is.
Your browser does the opening. Current browsers read WebP themselves, and ClipLime has a fallback decoder for those that cannot. The pixels that come out are the ones you see when you open the image in a browser tab. Nothing leaves your device.
Smaller file or original quality
Smaller file looks at each image. A photograph with more detail than the page can show is reduced to the chosen resolution (150, 200 or 300 DPI) and saved as JPG at quality 84. A graphic with flat colours, or an image with transparency, stays lossless. This is the default here, because a lossy WebP photo has already lost detail, and storing it without loss only makes the PDF big.
Original quality keeps every decoded pixel, with no second lossy step. That is exact, but it can be many times the size of the WebP. In our test a 3000 by 2000 lossy WebP photo of 199 KB became a 2.8 MB PDF, about fourteen times bigger, because the lossy WebP stored the picture in a very compact form and the lossless PDF cannot. With Smaller file the same image became 234 KB, about 15 percent bigger than the WebP. Real photos will give different numbers, but the pattern is the same.
In short, a photo that was lossy to begin with gains nothing from lossless storage, and an exact copy of a lossless WebP, such as a screenshot or a diagram, is kept either way.
What is kept: quality, transparency and animation
Quality: with Original quality nothing further is lost, and the picture is exactly what the WebP showed. With Smaller file a photograph goes through one more JPG save at quality 84 and, if it is bigger than the page needs, is reduced. The first loss, the one made when the WebP was created, cannot be undone either way.
Transparency: WebP can hold see-through pixels in both its lossy and lossless forms. They are kept as a soft mask, and the page colour shows through the clear parts. A picture with only a few clear pixels is flattened onto the page colour instead.
Animation: an animated WebP gives one page, with its first frame. We checked this with a three-frame file.
Where WebP files come from, and what else you can do
Many sites save pictures as WebP when you use Save image as, and many programs cannot open them. A PDF opens everywhere, which is why people convert. If you need single pictures rather than a PDF, WebP to JPG makes ordinary photo files, and Image to PDF takes mixed formats and explains page setup in more detail.