The drawings that you create in Flash are made up of vectors, which is the native graphics format in Flash. Vector graphics are made up of lines and curves that are defined by mathematical calculations. Bitmaps, on the other hand, are made up of pixels on a fixed-width grid. Usually, vector graphics tend to be a bit smaller because they're really just math; however, the more complex your drawing is, the bigger your file size will be, so that's where the bitmap comes in. Complex graphics with lots of tonality, gradients, and shading sometimes are better off as bitmaps because they will have a smaller file size burden. Images such as photographs should be bitmaps by default, although they can be converted from one format to another.
The real advantage of vector artwork is in scaling up or down. When you resize a vector graphic, you're merely modifying the equation that drew it, so no matter which direction you're going in, you don't lose resolution. Bitmaps don't have that advantage because they're on a grid. When you make the grid bigger, the pixel definitions maintain their ratios, so the image, scaling up, looks like a big, giant, ugly honeycomb mess. The pixels are resizing, thus losing their quality. Sometimes, pixels don't look so good when you scale down, too.