Below is a Product Element. The image used is only 320 pixels wide so when it's resized, like I have done here, it's "blown up" and becomes fuzzy. Notice the "Add to cart" button, etc.. That's how you can tell it's a "Product" Element.
Below is a simple Image element. Notice the lack of the add to cart button and other info. It's just an image, but the source is 640 pixels wide, so therefore it's not being "blown up". I have also added a link to it that takes you to the product page for it, so if you click it, you'll get product info.