Short version: Each file contains two different codes.
One code tells the operating system and every program on your computer what kind of file it is, so that those programs know that this is a file that they can open. For example, file type=JPEG means that Photoshop, Netscape, FileMaker’s “Insert Picture” dialog, your operating system’s “Wallpaper” or “Desktop Picture” setting, and any other program that has a use for a JPEG would recognize it as an appropriate file, whereas your MP3 player would know to grey it out in “File-Open” dialog boxes because it doesn’t do JPEGs.
The second code, the File Creator, tells the operating system what specific program “owns” that particular file. If you double-click the file or otherwise open the file without specifying a program to open it with, the second code determines what program will open the file. Three JPEG files sitting side-by-side in a folder could be: a Photoshop file that you’re in the midst of doing edits on; a Dreamweaver graphic for your web site; and a picture of your cousin’s kitty cat that opens in your lightweight fast-launching picture browser.
Installing a new program (e.g, QuickTime) would no longer “steal” the associations of all your existing files, because each file on an individual level has a File Creator association. It might steal your operating system’s DEFAULT setting (i.e., for JPEG files that don’t have a File Creator code use QuickTime etc) but files designated as Photoshop files would remain Photoshop files; files designated as Internet Explorer JPEGS would remain Internet Explorer JPEGS; and so on.
The Mac operating system uses File Type and Creator codes but it hides them too well, making it difficult to change the creator codes if you want to change them without adding 3rd party software. (The thinkng seems to be that newbies won’t want to mess with it and experts will find and use the 3rd party s/w but it still strikes me as stupid not to incorporate a place to change the flags right into the File Info window).
The newer Mac OS (MacOS X) uses a 2nd-generation version of File Type and File Creator: each file contains a binding key for File Type and File Creator, and the File Creator binding key is sophisticated enough to bind a file to one specific installed version of a program even if you have multiple copies installed (i.e, you can make a JPEG a Photoshop 7 JPEG or a Photoshop 6 JPEG if you have both versions installed on your computer). Again, you don’t get full access to these choices without the aid of 3rd party software, and again I think that’s silly and annoying.
MacOS X and the earlier versions of MacOS both have ways of treating files that have extensions but not File Types or Creators–for files like these, it works more like a PC does, with one program associated with each extension. So the fallback for files that don’t have the codes, your operating system still has a clue about what to do with the files if you double-click on them. But the behavior based on file extension alone gets overriden by the codes if the codes are present.