Maximum dimensions of thumbnails being created for added pictures depend on album properties (ie. every photo album can hold its own thumbnail specifications), the default values is 150 by 150 pixels. If a picture does not fit these dimensions, thumbanail is created by scaling the picture appropriately.
PhoA thumbanils are always stored in JPEG format, which causes from the most effective compression of this format. You can control the quality of thumbnails being created with program settings: higher thumbnail quality simplifies picture identification but causes more space usage. Because thumbnails are contained within photo album files (*.phoa), their dimensions and quality directly affect resulting album file size as well as space allocated for album in memory when opening it.