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In some cases it’s chosen by a third party.
My employer uses Akamai for CDN, security, etc. One of the optional services they offer is called Image and Video manager (IVM). One of the things IVM does is analyze image files and converts them to multiple target formats based on how you set it up.
Suppose you have an image on your website that is a 1000x1000 pixel PNG file that’s 500k in size. The first time a client fetches it Akamai will serve it as-is but will also hand off its URL to an image processing server. That server will analyze the image, and based on how you configure it, might create multiple JPEG & WEBP formats that are 250x250, 500x500, and 750x750 in size, as well as 1000x1000. The new images are highly optimized without impacting the perceptual quality, and all smaller than the original images size.
Once these images are created Akamai adds them into their CDN cache alongside the original image. Now when a client requests the original PNG file they may actually serve one of the other versions based on the browser being used and device characteristics like viewport size, etc. But it’s all 100% transparent to the end user.
https://www.akamai.com/products/image-and-video-manager
You're not wrong of course, but I really need people to understand that this level of detail is not what a top-level reply to a lower-end technical question is aiming for. Maybe this will be helpful to someone, but I already knew it and didn't need it sent to me, and it's going to go above OP's head. For the average end user, this is abstracted somewhere in the "host stuff" layer, and that's fine.