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'Saving for web' creates a file without an embedded 'preview' image (and may well strip out other data as well). This saves quite a lot of kilobytes, and the percentage is higher the smaller the original file. It's incredibly effective with web and avatar-sized images.
Here's a test I just did on a mid-size 1062 x 750 pixel image with CS2, looking at the saved file sizes on disk:
TIFF: 2.4Mb
JPEG level 10 ('maximum'): 160kb
'Save for web' JPEG 'maximum' quality: 128kb
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