Convert JPG to PNG — for upload forms and templates that insist on PNG, or as the first step before making part of an image transparent.
Most of the time it is because something demands it: an upload form that lists PNG only, a design template that expects PNG, or an app that handles PNG more predictably. Sometimes it is a step towards transparency — JPG cannot hold it, PNG can — so converting is the first move before erasing a background with the Remove background tool.
Converting does not make a JPG sharper. The JPG's compression already discarded some detail, and the new PNG simply stores the pixels it is handed, including any blockiness around edges. It does not create transparency on its own either. What it does give you is a file that is accepted where JPG is not, and one that does not lose more detail each time it is saved again, as JPG does.
When this tool writes a PNG it also tries a palette version — up to 256 colours at the Recommended and High settings, 128 at Smaller, 64 if you drag the slider below 60 — and keeps it only when it is smaller than the full-colour PNG. A photograph contains far more than 256 colours, so for a typical photo the palette version wins on size, and the colours are reduced with dithering to hide banding. It generally looks close to the original, but it is not a pixel-exact copy. Graphics that already use fewer colours are stored exactly. Images over 25 megapixels skip this step, and the result list tells you which kind of PNG you got.
Everything runs inside your browser. Because the image never reaches a server, we cannot store it or look at it. That difference matters when the file is company material or a personal photo.