What is the difference between TrueType fonts and Type-1 fonts?
"TrueType fonts were defined by Apple a couple of years earlier [...]" -- this is not correct. It is the other way round: TrueType came after Type1 (and its development was a direct result of Adobe's business praxis of pricing Type1 fonts too high, and keeping their format a trade secret for too long...
Type 1 fonts, also known as PostScript, PS1, T1, Adobe Type 1, Multiple Master, or MM are a format within the font industry that has been replaced by larger glyph sets.
For most of us non-designers, the additional options will likely go unused. In other words, OTF is indeed the "better" of the two due to the additional features and options, but for the average computer user, those differences don't really matter.
The TrueType format defines curves differently from PostScript fonts, and allows for the rendering of outlines using a hinting process, which improves the appearance of TrueType fonts on low-resolution output devices, such as computer monitors and low-resolution printers.
The Postscript Type-1 specification was created by Adobe back in 1985 or so. Type-1 fonts are vector based. You can find the specification in "Adobe Type 1. Font Format.".
TrueType fonts were defined by Apple a couple of years earlier so True Type and PostScript were competitors in the 1990s. Microsoft picked up True Type for the native Windows font format in the beginning 1990s (for using PostScript, additional tools like Adobe Type manager were necessary).
Today, Microsoft is fading out support for PostScript fonts. Try using one as an UI font in Vista. Good luck ;-)
As a successor of TrueType, Microsoft (I think together with Adobe) created the Open Type (anytime around 2000) format and Adobe converted their whole font library into the new format (you can still get them as Type-1 fonts).
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