What is the use of CDN in image optimization?

Ultimately, the CDN is a caching layer between your origin (aka webserver or http based storage) and your clients (end users, viewers, etc). Let's assume you are storing mezzanine quality, or high quality images on your origin. The end client requesting that image, might not be capable of downloading in an acceptable amount of time, so an image processing module, could be as simple as Image Magick, would process the High Quality image and pass down to the client a Lower (more acceptable) quality of the image. This happens in the first pass, but what do you expect for the next client, requesting the same image? It would be inefficient to do all of this again, therefore, the CDN would cache the processed copy of the image for a defined time period and serve up the next request, for the same image, from the Cache.

Image content delivery networks (CDNs) are excellent at optimizing images. Switching to an image CDN can yield a 40–80% savings in image file size. A content delivery network (CDN) refers to a geographically distributed group of servers which work together to provide fast delivery of Internet content. A CDN allows for the quick transfer of assets needed for loading Internet content including HTML pages, javascript files, stylesheets, images, and videos.