What is the difference between the "fine" and "normal" settings on my digital camera?

I have an Olympus Stylus 1010 Digital Camera, w/10.1 MP and 7X optical zoom. With the xD memory card it came with, at 10 MP, i can get only 400 pictures with the setting on "fine", or I can get like 800 pictures on "normal". What is the difference here? We are going to Italy so i obviously want my pictures to look as good as possible, but want to know if it is worth buying another memory card so i have enough pictures, or if i can just use the "normal' setting, where the one card will be enough. Any help is most appreciated.

"Fine" and "normal" are JPEG compression level indicators. "Fine" means a lower compression is used whereas "normal" uses higher compression. Obviously, the higher the compression the smaller the file size but the more details are lost in the process as well.

It's better to use the "Fine" option whenever you can to get the best the camera is able to offer. You should try to transfer pictures off of the card whenever you can. 400 pictures is a lot of pictures but if you're running low on space and don't have access to your computer switch over to normal. Create a line: leave the camera on "Fine" until the counter reaches 200. When you reach 200, switch over to "Normal". At this point, you should have enough room for 400 more pictures.

fine is better than normal simply put. But unless you're gonna make it huge u dont need fine.

It must have come with a very large xD card. As far as what your main question is asking, these determine how much information your camera will strip away from your images when it converts and saves it as a JPEG image. Fine will strip off less information than normal will. When it comes to printing your images (that is if you decide to print them), you should not see a difference given the megapixel level of your camera up until printing 8x10 prints. You SHOULD be okay for anything from 4x6-5x7.

As for the rest of your question... here's the thing. You could take one memory card with you, set your camera to the "normal" setting, and take 800 pictures, delete the ones you don't want, etcetera, or you could take 2 memory cards and split your photos up between the two. There are two benefits to this. The first one is that you are able to get that little bit of extra fineness in your pictures. The second is that if something happens (heaven forbid you accidentally format your card, you get an error, or you lose your camera), you've at least got some pictures that you can take home and say "hey, want to see the pictures from our trip?" rather than say "Hey, we lost all our pictures".